IS KASHMIR CONDUCIVE FOR INVESTMENT?
Land is a delicate subject in Kashmir as a result of the dread that influx of individuals could change its demographics. A tranquil atmosphere and a decent infrastructure is required to help the possibility of investment in J&K however both these elements are by and by missing in the region. A solitary highway leads from Kashmir's capital through the mountains to the remainder of the India which again isn't the sort of availability investors will search for. In the current times, the private sector is reluctant or not certain to put investment into serene or relatively developed pieces of India, which makes it increasingly hard to swallow that organizations will race to put resources into one of the most mobilized and troubled parts of the world.
Article 370 gave special status to J&K in the Union of India, the Article 35A empowered the state to define the state subjects and grant exclusive rights to them. This kept non-locals from purchasing land, claiming or owning property or going after jobs in J&K. J&K was not by any means the only State to have this law. Land laws vary from place to place and that is why in Karnataka, only an agriculturist can purchase agricultural land. Himachal Pradesh, Assam, Tripura, Andaman & Nicobar Islands, Nagaland and Arunachal Pradesh have restrictions on outsiders buying land. After the extension of J&K Reorganization Act, 2019 which abrogated Article 370 and 35A of the Constitution of India, a great deal of hypotheses were made on destiny of J&K that very little would change as the non-local investor will be sceptical to put investment into J&K whereas the Government strictly believes that the extension of Centrals Acts to the recently made UT of J&K will be a window to improvement and increased investment in J&K. Under the Jammu and Kashmir Reorganisation Act, 2019, five old land laws were held, in spite of the fact that the proviso confining ownership of private property to state subjects was struck down however no further changes were made to land laws. The Real Estate (Regulation and Development) Act, 2016 was earlier applicable to other parts of the country except J&K but now will now be relevant to J&K. It aims to establish Real Estate Regulatory Authority for regulation and promotion of the real estate sector and to ensure sale of plot, apartment or building. A RERA policy exclusively for J&K must be formed to address the whole inquiry regarding property buy and to make the system and rules expressly cleaner and exact. Article 370 of the Constitution gave the J&K law making body to make separate laws for the state. Laws affirmed by Parliament were not applicable in J&K, unless separately cleared by the state assembly. This regularly presented issues for organizations - they needed to adhere to various laws in the state from those in the remainder of the nation. It was seen in 2011, when Gujarat State Petronet Ltd (GSPL), commanded to lay the 1,670 km gas pipeline from Gujarat to Srinagar experienced a significant barrier in light of the fact that J&K had no arrangement in its state law to give it the endorsements required for laying such a pipeline in the state.
Jammu and Kashmir's economy is dependent on agriculture and associated activities. The Kashmir valley is likewise known for its horticulture industry, sericulture and cold-water fisheries. Kashmiri saffron is best on the planet and brings the territory an attractive measure of outside trade. Wood from Kashmir is utilized to make top notch cricket bats, known as Kashmir Willow. The agricultural exports from Jammu and Kashmir include apples, barley, cherries, corn, millet, plums, apricots, oranges, peaches, pears, almonds, walnuts, saffron, sorghum, rice, vegetables, and wheat, while manufactured exports include handicrafts, rugs, and shawls. District Doda is known for its deposits of high-grade sapphire. However, industrial development in the state faces several major constraints including extreme mountainous landscape, power shortage, terrible framework, bad infrastructure and frequent shut downs.
J&K’s tourism industry is a financial facilitator and has the capability to create enormous employment for diverse segments of the society. The tourism industry has not fully realised its latent capacity due to the limitations on trade and purchasing property. Banks too are reluctant to extend advances, in light of the fact that if there should be an occurrence of defaults, they couldn't dispose of the property to recover the amount under the SARFAESI Act which after the presentation of Reorganization Act, 2019 is material in the UT. The number of educated unemployed youth runs in lakhs due to insufficient employment opportunities plus the private sector in J&K is at an early stage owing to the hostile security situation and incessant shutdowns. Hence, the youth in J&K is compelled to move to other parts of India leading to drain of talent. Tourism industry can create tremendous opportunities but demands additional hotels, commuting services like Ola and Uber, Food and Beverage ventures and other allied business. The revision in domicile law may prove advantageous for industries and MNCs for establishment of prolific economic ventures. The ease in procurement or lease of land will attract more investors to the territory boosting the monetary structure of J&K. It is possible that the industrial segment in UT will receive a big boost with the inflow of income.
J&K has been a shut zone for private investment however the current system at the centre has been reliably promoting interest in J&K to support non-local investor confidence. The budget speech given by the Hon’ble Finance Minister of India Ms. Nirmala Sitaram on March 17, 2020 mentions that the budget for 2020-21 for J&K shall cross 1 lakh crore mark for the first time, to make J&K a model of development and making the UT one of the fastest growing UTs/States. This is the highest ever budget envisaged for Jammu and Kashmir. An investment summit was to happen last year but has now been scheduled for November 2020 which however, might get postponed due to the current Covid-19 situation. Officials have stated that as many as 41 companies have shown interest in investing over Rs 15,000 crore in the UT in the form of 61 Expression of Interest (EOIs). These companies intend to invest in sectors like information technology, infrastructure, renewable energy, manufacturing, hospitality, defence, skills education and tourism. The government is even contemplating about providing some concessions and tax holidays of at least 10-15 years in return for the investment and whether the investors would procure the land or it would be given on a lease basis is as yet under thoughts. The removal of special status and protections under Article 35A would not have much of an impact on the ownership of industrial land but might have implication on other types of land. The 2016 Jammu and Kashmir Industrial Policy will remain in place till March 31, 2026. Under this policy, the government can only issue 90-year leases to investors. As per the existing rules, no businesses can own industrial land in the UT. The mining industry has recently witnessed that a majority of the mining lease have gone to non-locals. There has been a surge in the mining auction receipts and might prove to be profitable affair for the UT.
As per the indiainvestmentgrid.com (India Investment Grid (IIG) is an initiative of Department for Promotion of Industry & Internal Trade (DPIIT) Ministry of Commerce, Government of India and Invest India, the National Investment Promotion and Facilitation Agency), there are 70 on going and upcoming projects which are either in the planning or implementation stage in J&K and shall generate 22 opportunities worth 849.44cr in the real-estate sector, 13 opportunities worth 886.3 cr in waste & water sector, 12 opportunities worth 4499.35 cr in the transport sector and 7 opportunities worth 469.82cr in the IT & Telecom sector and various other opportunities in the health and food sector. Several government schemes/policies have been introduced, amended or are already in place to promote industrial growth, development & investment in J&K such as: Industrial Development Scheme (IDS), General Operational Guidelines for IDS, J&K (DRAFT) Eco Tourism Policy, J&K Industrial Policy, J&K Logistics Policy, J&K single window for facilitating investors, J&K Start Up Policy, J&K Trade & Export Policy etc. A new Department of Registration under the Registration Act, 1908 (Central Act) has already been accorded sanction by the State Administrative Council (SAC) of J&K and shall function under the administrative control of the revenue department and will provide quick services to the citizens, for registration of documents pertaining to immovable property, like sale, gift, mortgage, lease and bequest.
From the above realities it appears to be quite favorable and conceivable that non-local investment in J&K will soon kick-start. Whether peace will bring investment to the valley or investment shall bring peace to the valley, is an inquiry which truth will surface eventually? Regardless of whether J&K is experiencing a new sunrise of hope, success, progress which will usher J&K towards harmony is again a question with no specific answers. J&K has never been opposed to investment from outside; moreover there were provisions for handing over land on lease to outsiders for investment prior to August 5, 2019. Numerous non-local business people had started their industries during the 1980s in Kashmir, but because of the bad infrastructure, absence of rail network, electricity, and political shakiness which rose during the 1990’s, those units shut down and are lying sick. The unit holders did not leave Kashmir as a result of Article 370, but due to political agitation in the Valley. Notwithstanding, it is appropriate to comprehend that the shutdowns and the lockdowns have profoundly affected the local economy. The financial future might be significant once we get the chance to see the genuine execution and aftereffects of the government's activity. Private sector investment is the need of the hour; however that is probably not going to occur over nightly given the present status of investment activity in India and the immense political change occurring in the UT. Spending on the infrastructure is an increasingly sensible alternative, i.e. if roads, bridges, schools are built properly, health facilities and municipal services, and services like courts, banking and government services actually lead somewhere, and spur other economic activities in UT. With most of the Central Acts now applicable to Jammu and Kashmir with effect from October 31, 2019 in terms of the Jammu and Kashmir Re-organisation Act, 2019, a good infrastructure in the UT shall in all probability prove beneficial for the UT and might attract hassle-free investment not only from other parts of the India but worldwide as well.
The Authors Viqas Malik and Romaan Muneeb are Lawyers at the J&K High Court and Partners at “Malik and Romaan Law offices, Srinagar”. The Authors can be reached at Malikandromaan@gmail.com