EASE OF DOING BUSINESS – PART-IV: Endless Permissions: Industry pays the price of policy failure in Kashmir

Srinagar, Mar 29: The promise of “Ease of Doing Business” in Jammu and Kashmir is increasingly being questioned by industrial stakeholders, particularly in Kashmir, where entrepreneurs say procedural bottlenecks, financial burdens, and administrative delays continue to undermine the region’s investment climate.

While government reforms and digital initiatives project an image of streamlined governance, the lived reality for industrial units in Kashmir reflects a system where even routine business adjustments are treated as complex regulatory events, triggering lengthy approval processes and recurring financial liabilities.

At the core of the issue is the policy framework governing industrial land in notified estates.

Originally conceived as a concessional incentive to promote entrepreneurship, investment, and employment, land allotment has, over time, evolved into a recurring source of revenue extraction.

Instead of remaining a one-time facilitative measure, the same parcel of land is effectively monetised multiple times through procedural interventions.

Entrepreneurs in Kashmir report that even minor internal restructuring leads to fresh financial obligations linked to current land premium rates.

One of the most contentious aspects is the requirement for prior approvals for internal business changes.

These include induction or retirement of partners, conversion of proprietorship into partnership or company, changes in shareholding patterns, and even transfer of ownership to legal heirs.

In most states, such changes are either self-certified or simply reported.

In Kashmir, however, each modification requires prior clearance, often involving months of file movement across departments.

An industrial entrepreneur from Srinagar, who recently changed the partnership structure, said the process took close to eight months.

“We only inducted a new partner to expand operations, but the process dragged on. We were asked to re-execute the lease as if the unit were new and pay charges again on the same land. It felt like we were being penalised for trying to grow,” he said.

In many cases, these changes are not treated as a continuation of the same enterprise but as entirely new transactions. Industrial units are required to surrender existing lease deeds and execute fresh ones, effectively restarting their legal relationship with land that has already been allotted and developed.

The financial implications are substantial. Entrepreneurs report that the induction or retirement of partners can attract charges of up to 50 percent of the prevailing land premium.

Transfer of lease or change in constitution is often charged at around 30 per cent, while even minor changes such as alteration in business activity or name can attract an additional 5 percent.

These are in addition to annual ground rent, maintenance charges, water fees, and construction-related permissions. In effect, the same industrial plot is paid for multiple times.

Equally concerning is the absence of defined timelines.

Applications for such approvals frequently remain pending for six months to over a year, with files moving between departments for multiple No Objection Certificates.

Even in cases involving transfer to legal heirs after the death of a promoter, units remain stuck in administrative limbo, affecting operations and employment.

This situation in Kashmir stands in contrast to other Indian states operating under the Business Reform Action Plan, where approvals are time-bound and often deemed granted if no response is received within a fixed period.

In those systems, businesses are allowed to function without being stalled by procedural delays.

In Kashmir, however, leasehold land further complicates matters, as banks are reluctant to finance against such assets, often forcing entrepreneurs to pledge personal property.

The cumulative effect is a climate of hesitation and uncertainty.

Entrepreneurs in Kashmir are increasingly reluctant to expand, restructure, or formalize their businesses.

Growth decisions are delayed, and compliance burdens often outweigh business opportunities.

Chief Secretary Atal Dulloo has acknowledged the issue, stressing the need to eliminate redundant procedures such as multiple No Objection Certificates.

He noted that even small enterprises like schools and clinics face excessive clearances, discouraging investment, and called for time-bound reforms and simplified systems.

Despite such recognition, the gap between policy intent and ground reality remains stark in Kashmir.

For industrial units, doing business continues to mean navigating a system where every change demands permission, every permission takes time, and every step forward comes at a recurring cost.