As a major consumer market in northern region, Kashmir sources its requirements from across the region. With the curfew-strike combine taking over the routine for a month now, the manufacturing sector in Jammu is in a serious crisis, reports Masood Hussain
Ever since Gulab Singh purchased Kashmir in 1846, Jammu would be custodian of the fleece that the ruler would take home from Srinagar. With trade routes connecting Srinagar with Yarkand and Rawalpandi, Jammu was nowhere even closer to a trade trek. But the situation changed after 1947 when the controversial Redcliff Award led to the laying of a road between Punjab and Jammu through Gurdaspur. As the new political geography forced a closure on the Jhelum Valley Road, connecting Kashmir with Rawalpandi, it was the Banihal Cart Road that survived as the only access road for reaching Srinagar.
In the last nearly 70 years, the heterogeneous regions of Kashmir and Jammu have evolved into an economically integrated societies which are inter-dependent. This is partly because Jammu has evolved into state’s industrial hub, owing its access to raw material, larger market and the railhead, and it is aware of the fast changing requirements of Kashmir. Jammu is always in crisis when Kashmir is in tension even though its politics is completely different.
“If you see Jammu today, it is almost a copy of Srinagar barring deployments,” Surinder Kumar, an executive in a key industry said. “Jammu is as deserted as Kashmir is, there are not many people in buses and roads and it is dull simply because we are not busy, we do not have any work.”
“Kashmir is in turmoil for a month but Jammu has been in crisis for two months,” Kumar explained. “Earlier during Ramzan, the month long fasting, the consumption in Kashmir goes down and we reduce the production.” Kumar said normally the practice was that the production would peak after Eid but this time, it led to another crisis after a militant leader was killed, two days after the festival.
When Home Minister Rajnath Singh flew to Srinagar, the trade boycotted him. But Rakesh Gupta, the president of Jammu Chamber of Commerce and Industry, felt compelled to take the first flight to Srinagar and apprise the visiting leader about the crisis the trade in Jammu is facing.
“Massive losses are piling up,” Gupta told Kashmir Life. “The tourism is gone away so is the yatra and now the production has been stopped for lack of demand, it is a massive loss.”
Gupta said the state has already suffered an estimated loss of Rs 1000 crore. “It involves everything from food items to tourism,” Gupta said. “All the weddings in Kashmir got cancelled and do you know that it is a massive loss as marriages were solemnized and the functions associated with them were cancelled.”
Ravinsh Gulati is a major oil manufacturer in Jammu. A second generation industrialist, Gulati’s Pir brand is a major competitor to P-Mark, edible oil that has manufacturing facility in Punjab. “Kashmir is our main market and right now we are running on only 20 percent of our capacity,” Gulati said. “We are accumulating losses because the tensions in Kashmir have impacted the entire cycle.”
“Kashmir is a bigger market and its closure means a lot for various industrial facilities within and outside J&K,” Gulati said. “There are at least 50 industrial houses which are on the verge of collapse because the cash chain is disturbed and fall in demand has added to the losses.”
Sanjay Puri is Jammu’s major flour manufacturer. His P-Mark Chakki Atta has a major market share in Kashmir. “We have reduced our capacity by around one third,” Puri said. “We are aware that the people, whether in peace or turmoil, still require food but the real issue is the transportation.”
Puri said part of the manufacturing facilities is suffering because of the liquidity issue. “We are trying to keep the supply lines running but the situation on ground neither permits quick returns nor is a facility around that the credit will become available in coming days,” Puri said. “This is putting us to stress especially from south Kashmir that is hit hard by the crisis.”
Off late, some of the major wholesalers had flown to Jammu to apprise their suppliers of the situation. “That was a routine reassurance,” Puri said, “The problem is that you can not accept cash of more than Rs 2 lakh and all transactions as per the new tax laws have to be through banks.”
Puri said in the current situation, owners of major brands are fighting another battle: to prevent competitors’ from taking over. “At a time when people are not earning anything, ideally they would prefer brands selling cheap which is a problem for brand owners,” Puri said. “We may not be able to reduce the costs but we chip-in with a credit facility and that impacts the chain.”
Given the culture of people in Kashmir and Ladakh being hoarders of eating stuff, Puri said consumption might not have fallen down but keeping the supply lines intact is an issue. “We run on lower capacity and store but that too can have a limit,” he said.
Unlike Puri, businesses having summer as the only season are literally grounded. These include the ice cream and the cold drinks for which packaging facilities are all Jammu based.
A senior executive of the Pepsi Co said that their requirement in Kashmir is almost 40 truckloads every 24 hours. “We control 78 percent of the cold drink market in Kashmir and to keep it going it is a huge exercise,” the official, talking anonymously said. “During peak tourist season, the demand appreciates in Kashmir putting pressure on the existing bottling facilities in Jammu.” He said the ongoing strike has seriously impacted the business.
Coke that is playing second fiddle to Pepsi has not much of the impact from Kashmir because Jammu continues to be its main market.
Most of the major MNCs have their Forwarding Agents stationed in Jammu. Since 2008, a few companies have created warehousing facility in Kashmir but major businesses still prefer Jammu. With nothing major happening in Kashmir, they are also feeling the heat.
Kashmir depends on Jammu’s manufacturing sector for key requirements: flour, white goods, steel, corrugated boxes for apple packaging, and edible oils. Steel, mostly TMT, that forms the bulk of turnover from Kashmir, was mainly the Jammu monopoly till two major steel manufacturing units came up, one each in Srinagar and Lassipora. However, the controversial Lassipora facility went up in flames early this year, reducing Kashmir’s own manufacturing to Himalayan Rolling Steel Industries, the plant that Shahid Kamili runs in Rangreth.
Kamli’s plant has prevented a capital flight of nearly Rs 350 crore but the collapse of the construction sector has impacted these facilities in Jammu and Srinagar almost the same way. The only difference is that the Jammu steel makers are solely dependent on scrap, the raw material for the TMT bars, from Kashmir and Ladakh that has halted. It has added to their crisis.
“We control sixty percent of the steel market in Kashmir and Ladakh,” an official of Narbada Steels said. “With construction activity halted, it will have its own costs.”
There is no construction activity anywhere across Kashmir because the cement manufacturing facilities have closed down and the non-local construction labour has mostly left for home. Absence of local cement is now forcing the “grey” market to access the unreliable non-local brands.
Explains Lalit Mahajan, who heads the Jammu Federation of Industry: “By an average, Jammu industry loses Rs 400 crore a month because of the turmoil in Kashmir.”
Mahajan said that the costs for the industry have gone up and these are beyond the margins that would help sustain the sector. “We have to pay power bills, interest on working capital and we have to also pay for the labour,” Mahajan said, “And the situation is that we may not be able to pay either of the these costs.” In 2008, the government as part of the negotiation with the Jammu Samiti had agreed to grant some concessions to the industry.
“People in the government do not appreciate the fact that Jammu is hugely dependent on Kashmir market and any disturbance in Srinagar has costs in Jammu,” Mahajan said. “We have limitations in selling our products in Punjab and that is a huge restriction.” He said that a delegation has already met the government requesting them to manage the situation so that the crisis does not prolong because it heavily taxes Jammu manufacturing.
Officials said that traffic on the highway is reduced to a trickle. “In July 2015, we had 26459 trucks crossing Lower Munda and it has fallen to 18052 in July 2016,” a top officer in the state finance ministry said. “Most of this inward traffic was in the initial days around Eid. Now we do not have even a single truck on one day.” Grave tensions in Lethpora have added to the mess. The officer said the number of tankers have fallen from 1342 in 2015 to 920 in July 2016.
The worst hit is not the import. It is export instead. “Against 31273 trucks that ferried good out of Kashmir in July 2015, the numbers for 2016 July is only 17648.”