Special status for Jammu and Kashmir has gone, but outside investors cannot buy land there

When the Centre stripped Jammu and Kashmir of special status under Article 370 and split the state into two Union Territories, one of the main rationales given for the decision was this: special status was a “hurdle for the development of Kashmir”. At the same time, it revoked Article 35A, which enabled the government of the former state to define “state subjects” and reserve for them certain rights, including the right to own land in Jammu and Kashmir.

As part of its development agenda in Jammu and Kashmir, the government is organising a global investors summit, scheduled to take place in April. An earlier attempt in October had to be aborted because of the security situation. The government’s stated aim: to draw outside investment to the region now that it is free of the restrictions imposed by special status.

Starting February 17, 54 bureaucrats have fanned out across major cities in the country, holding road shows, wooing investors. International roadshows are also on the cards, said the government in a press statement, while “mini conclaves” will be held in Srinagar and Jammu in March 2020. Meanwhile, the government is creating land banks for prospective outside investment.

But what exactly has changed for investors since special status was removed? 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.

“In maximum states of India, land for industry is given only on lease. Maybe the lease period will be longer but they will not be given free-for-all rights,” said Ravinder Kumar, managing director of the Jammu and Kashmir Trade Promotion Organisation, notified by government as the nodal agency for the summit.

The Jammu and Kashmir government is working on a new industrial policy hopes to roll it out before the summit. But even then, the clause that outside investors could only lease land was unlikely to change. For that to happen, there would have to be changes to the local land policy, Kumar explained. Under the Jammu and Kashmir Reorganisation Act, 2019, five old land laws were retained, although the clause restricting ownership of private property to state subjects were struck down but no further changes were made to land laws. According to the prevailing rules, no businesses can own land in Jammu and Kashmir.

A new industrial policy?

The new industrial policy, meant to “revamp” and “improve” on the 2016 policy, was being formulated in consultation with the Centre, said Manoj Kumar Dwivedi, principal secretary, industries and commerce. “There are certain things, like tax holidays, which must come from the government of India,” he said. “I cannot be certain about the time-frame but let’s hope we are able to have a new policy before the summit. Everybody’s working on it.”

But Mahmood Ahmed Shah, director for Industries and Commerce, Kashmir, affirmed that not much would change for industrial land. “Before 5 August, investors – locals as well as non-locals would take land on lease and set up their industry,” he explained. “The procedure so far is the same.”

Dwivedi admitted the removal of special status and protections under Article 35A would not have much of an impact on the ownership of industrial land. “That may have implication on other types of land,” he said.

But he argued that ownership of land was not so important to potential investors. “Ultimately, an industrialist is interested in getting secured land,” he said. “It doesn’t matter to him whether he has the ownership rights or not. The land should be there for some period. Second, for businesses, he should be able to tell the bank and other financial institutions that this land is available with him for a fixed period of time so that his credibility goes up.”

The government would ensure that investors had secure possession of land but not allow it to be “misused”. “It has to materialise in solid investment on the ground, we will ensure it,” Dwivedi said.

A land bank

The 2016 industrial policy had anticipated the creation of a new land bank of 20,000 kanals (about 2,500 acres) and hoped to get Rs 20,000 crore in investment over a decade.

According to the Jammu and Kashmir Economic Survey of 2017-18, as of March 2017, the former state of Jammu and Kashmir had 53 industrial estates spread over 31,126 kanals (about 3,890 acres). With an investment of Rs 51,13.39 crores, a total of 32,226 small-scale industries provided employment to 1.58 lakh people. There were also 103 large and medium-scale units, with Rs 7103. 18 crore in investment, employing 24,000 people, said the economic survey report.

The government is now more ambitious. It has identified 6,000 acres of state land in Jammu as well as Kashmir for the creation of a land bank. “Out of this land, 1,500 acres of land falls in the Kashmir region while 4,500 acres have been identified in the Jammu region,” said Kumar.

It is spread across all 20 districts of the Union Territory of Jammu and Kashmir. “We have identified chunks of land in each and every district [of the Kashmir Valley],” Shah said. “Between 1,000-2,000 kanals [125-250 acres] of identified land falls in Anantnag district, 1,000 kanals [125 acres] each have been identified in Ganderbal, Bandipora and Baramulla.”

The department of industries had completed the formalities to take over the land, he said. “All the paperwork is done but handover and takeover between our department and the revenue authorities isn’t complete yet,” Shah said. Government authorities did not reveal whether this land was already in use.

Film cities and IT towers

Officials said they would invite investment according to what the region had to offer. “We are focusing more on the land identified near the national highways so that transport will be easy,” said Kumar. “Some of the land we have identified also falls in the interior areas. In those areas, we are looking for investment in tourism, hydro energy and wellness centres.”

Ahead of the summit, the government has identified 14 sectors for which it will be seeking investment. “The key sectors include horticulture, agriculture, food-processing, tourism, industry, manufacturing, information technology and pharmaceuticals,” Kumar said. Apart from a land bank, the government hopes to woo investors with a “pristine and pollution free environment, skilled labour and investor friendly policies”.

Dwivedi explained the new Union Territory had to play to its strengths. “We cannot expect heavy engineering and big manufacturing companies to come in,” he said. “Our strengths include food processing, agro-processing, silk and wool-processing, apple and allied machinery like cold storage and other facilities.”

He was also hopeful of expanding “film tourism” and setting up film cities and studios. Srinagar and Jammu would get “IT towers”, he said, which would make it attractive for information technology.

Shah thought the Valley was ripe for investment in the health sector, in wood-based industries and education. “A lot of Kashmiris travel outside the Valley seeking specialised treatment in three areas: cancer, nephrology and cardiology,” he elaborate. “So, the health sector has opportunities. You also have a lot of scope in education, like private colleges, universities and boarding schools.”

A summit for Ladakh

The Union Territory of Ladakh, carved out of the former state of Jammu and Kashmir, has been left out of the investors’ summit, said a senior official in the ladakh administration.

Officials in Ladakh, however, said they were working to attract investors to the high-altitude region as well. “You can say that we are basically working on creating conditions favourable for investors,” said the senior official.

While officials are identifying state lands suitable for investment, they say orders to do so were issued well before August 5. “In Leh district, we have six sub-divisions and in each sub-division we have identified 50 acres of land,” said another official in Ladakh. “Sub-divisions which are bordering China have more state lands and the process of identifying state land for future infrastructure development is on.”

According to the official, a “mini conclave” for local investors in Ladakh was held in September last year, organised by the Jammu and Kashmir Trade Promotion Organization and the Confederation of Indian Industry.“Ladakh was not yet a Union Territory [the former state formally became two Union Territories on October 31],” he said. “Now that we are a Union Territory, we are working on a new proposal for the summit. But we don’t know when.”