Context:

• The landscape of Foreign Direct Investment (FDI) in Jammu and Kashmir has witnessed a significant transformation, particularly following the abrogation of Article 370 in August 2019. This pivotal change in the constitutional status of J&K has opened new avenues for economic development, with the introduction of the Policy for Promotion of Foreign Investment in the Industrial Sector in Jammu and Kashmir serving as a cornerstone for revitalizing the region's economic potential.

Key policy highlights

The policy is designed to foster an investor-friendly ecosystem, featuring several critical components:

1. Duration: The policy is valid for a period of 10 years, providing a stable framework for long-term investments.
2. Investment threshold: It facilitates large foreign investments exceeding ?100 crore, encouraging substantial capital inflow.
3. Foreign stake: A minimum of 51% foreign ownership is mandated, ensuring significant foreign control and expertise in the invested projects.
4. Land allocation: The policy provides dedicated parcels of land in industrial estates specifically for foreign-invested industries, addressing previous land ownership challenges.
5. Infrastructure support: It offers multi-purpose buildings equipped with plug-and-play facilities, simplifying the operational setup for foreign investors.

Regulatory Framework

The new policy is anchored within the broader Indian FDI regulatory landscape, which includes:

• Companies Act: Governs the incorporation and regulation of companies in India.
• SEBI Regulations: Oversees the securities market and protects investor interests.
• Foreign Exchange Management Act (FEMA): Regulates foreign exchange transactions and promotes orderly development of the foreign exchange market.
• Foreign Trade Development and Regulation Act: Facilitates and regulates foreign trade in India.
• Income Tax Act: Governs taxation policies applicable to foreign investments.

Economic impact and transformation

The policy signifies a substantial shift from the previous investment climate in J&K, characterized by several pre-2019 challenges:

• Special status: Under Article 370, non-domicile residents were prohibited from land transactions, severely limiting investment opportunities.
• Security concerns: Ongoing security issues deterred potential investors from entering the region.
• Restricted land ownership: The inability of non-residents to own land created significant barriers to economic development.
   

Post-2019 Developments:

• The abrogation of Article 370 has led to amendments in land laws, allowing non-residents to purchase and develop land.
• New domicile regulations have simplified the process of establishing businesses, while liberalized policies have attracted investments in critical sectors such as agriculture, tourism, and manufacturing.

Investment Facilitation Mechanisms

To streamline the investment process, the government has implemented a comprehensive Single-Window Portal through the Investment, Promotion, and Facilitation Cell (IPFC). This portal:

• Streamlines processes: It simplifies the investment processes for non-resident investors.
• Centralized platform: Available at investjk.in, it serves as a one-stop solution for all investment-related queries and applications.
• Simplified procedures: The portal aims to reduce bureaucratic hurdles, making it easier for investors to navigate the regulatory landscape.
  
   

Looking ahead

• The Policy for Promotion of Foreign Investment represents a strategic blueprint for transforming Jammu and Kashmir into an attractive investment destination. By removing historical barriers, creating transparent processes, and offering robust incentives, the policy aims to unlock the region's substantial economic potential.