Associate Professor, The Business School, University of Jammu, India
Online published on 7 September, 2012.
A significant feature of the Indian economy since Independence is the rapid growth of the Micro, Small and Medium Enterprise (MSME) sector which has emerged as a highly vibrant and dynamic sector of Indian economy. In fact, it is one of the success stories of modern India. This sector contributes 8 per cent of the country's GDP, 45 per cent of the manufactured output and 40 per cent of its exports. The MSMEs provide employment to about 60 million persons through 26 million enterprises (Task Force on MSME, 2010). The labour to capital ratio in MSMEs and its overall growth is much higher than that of large enterprises along with the fact their geographic distribution has also been more even as compared to large industry. Thus, MSMEs are important for the inclusive growth and development of the economy as the sector is considered as the nursery for the growth and development of entrepreneurship in general and for the industrially developing regions in particular. Government of India has been promoting investment in MSME sector through various policy measures, and incentives have remained instrumental promotion measures to induce investment in the different parts of the country whether it was the investment in the industrially backward regions or for the export oriented activity. With globalisation and in compliance to WTO Agreements, protectionist measures have been phased out, but still Central government as well as the state governments continue to provide various incentives for the promotion of investments in the industrially backward regions particularly in the hilly states of India: seven North Eastern states, Uttarakhand, Himachal Pradesh and Jammu & Kashmir. Central Government has framed a separate industrial policy for North East which is practically applicable to all these hilly states. The paper examines the latest industrial policy in the state of Jammu & Kashmir, Jammu & Kashmir Industrial Policy 2004, and makes an attempt to critically analyse the contribution of various incentives in attracting fresh investment in the state of Jammu and Kashmir.
