JAMMU , Dec 1: Delayed disbursement of incentives under New Central Sector Scheme (NCSS) for Jammu and Kashmir has cast a shadow over the future of new industrial units in the Union Territory.
Sluggish implementation of much hyped NCS Scheme has created uncertainty and financial strain for many new industrial units, which have invested heavily based on promise of the GST-Linked Incentive (GSTLI) and are now facing severe cash flow challenges.
According to the sources, more than 90 percent cases of GST Linked Incentives have not been settled in the last three year, with the result the risk of accounts of these industrial units turning into Non-Performing Assets (NPAs) looms large, threatening their very survival.
Situation can be gauged from the fact that not even a single case of GSTLI was sanctioned in the current financial year, sources added.
Announced in February 2021 by the Government of India, the NCSS was envisioned as a game-changer for J&K’s industrial development. Backed by a substantial allocation of Rs 28,400 crore, the scheme aimed to attract investment, create jobs, and spur economic growth in the region, historically considered industrially underdeveloped.
A centrepiece of the scheme was the GST-Linked Incentive (GSTLI), offering businesses a reimbursement of 300 percent of their investment over 10 years—a provision that drew widespread interest from investors.
Despite its ambitious goals, the scheme’s rollout has been fraught with challenges. To date, 918 industrial units have been registered under the scheme, with a cumulative investment commitment of Rs 25,000 crore. However, only Rs 270 crore has been disbursed so far, and the GSTLI component has received a meager Rs 40 crore over the past three years.
“More than 1500 case of GSTLI, including 850 from Jammu and around 680 from Kashmir are pending as on date while not even a single GSTLI case was sanctioned in the current financial year,” sources said.
The delays in disbursement have been attributed to repeated revisions of the Standard Operating Procedures (SOPs) by the Industries and Commerce Department, leading to confusion and misalignment with the original guidelines issued by the Department for Promotion of Industry and Internal Trade (DPIIT).
Businesses, particularly new units that have invested heavily based on the promise of incentives, are now grappling with severe cash flow issues. With funds tied up and no clarity on reimbursement timelines, many units face the looming risk of their accounts turning into Non-Performing Assets (NPAs). This financial distress not only threatens the survival of these businesses but also dampens investor confidence in J&K as a viable industrial hub, sources said.
Industry experts and stakeholders have urged the Government to address these bottlenecks promptly. They stressed the need for streamlining approval processes, ensuring timely disbursement of incentives, and aligning SOPs with the scheme’s original objectives to restore trust among investors.
“The NCSS holds immense potential to transform J&K’s industrial landscape, but only if implemented effectively. The current delays because of bureaucratic hurdles are undermining its impact and could tarnish the region’s reputation as an investment destination,” said a senior industry representative.
Admitting delay in disbursement of GSTLI, official sources told the Excelsior that State Level Committee for sanctioning the incentive cases could not meet this financial year due to enforcement of Model Code of Conduct owing to Lok Sabha elections and then J&K Assembly polls.
“The committee is all set to meet in the next three-four days and clear the pending case of disbursement of incentives,” sources added.
