by Admin | Oct 23, 2024 | Uncategorized
Introduction
Jammu and Kashmir, known for its breathtaking landscapes, is now emerging as a region of industrial promise. The state’s unique geographical position, combined with government initiatives, offers a compelling opportunity for businesses, especially in the pharmaceutical sector. As India aims to become a global pharmaceutical powerhouse, Jammu and Kashmir plays a critical role in providing cost-effective manufacturing locations, supported by attractive subsidies and incentives.
Establishing a pharmaceutical manufacturing unit here not only taps into the growing global demand for medicines but also benefits from financial support offered by the central and state governments. These subsidies significantly lower the costs of setting up and operating a factory, making Jammu and Kashmir a lucrative destination for pharmaceutical entrepreneurs.
Government Schemes and Subsidies
In recognition of Jammu and Kashmir’s potential as an industrial hub, both the central and state governments have introduced several schemes to encourage investment in pharmaceutical manufacturing. These programs aim to reduce the financial burden on investors and create an enabling environment for industries to flourish.
One of the primary schemes benefiting industries in the region is the Industrial Development Scheme (IDS). This scheme offers substantial financial assistance to industries setting up in Jammu and Kashmir, particularly for capital investment. The scheme provides capital investment subsidies of up to 30% of the project cost, with an upper limit based on the size of the unit and the sector.
Additional subsidies cover areas such as:
- Interest subsidies on loans taken for setting up infrastructure.
- Power subsidies that reduce the cost of electricity, crucial for energy-intensive pharmaceutical production.
- Transport subsidies to help companies with the logistics of bringing raw materials and distributing finished products, given the region’s relatively remote location.
Special Incentives for Jammu & Kashmir
Jammu and Kashmir has its own set of special industrial packages designed to promote investment. These include tax holidays, rebates, and subsidized credit. One of the most attractive aspects for pharmaceutical manufacturers is the Production Linked Incentive (PLI) Scheme, which aims to boost domestic production of high-value pharmaceutical products.
The PLI scheme offers incentives tied to incremental sales of products made in the region. Pharmaceutical manufacturers that invest in Jammu and Kashmir can receive government payouts based on the increased volume of their production, making it more attractive for companies to expand their operations here.
Moreover, the government has introduced GST exemptions and income tax holidays for businesses in the state. These fiscal incentives are vital for offsetting the initial investment costs, especially in the capital-intensive pharmaceutical sector.
Eligibility Criteria for Availing Subsidies
While the subsidies and incentives are substantial, businesses must meet certain eligibility criteria to benefit from these schemes. Pharmaceutical factories must meet guidelines related to:
- Minimum investment thresholds, depending on the scale and scope of the unit.
- Employment generation requirements, where the business must create a specified number of local jobs as part of its operation.
- The factory should be established in designated industrial zones of Jammu and Kashmir to qualify for certain subsidies.
These criteria are set to ensure that the subsidies target serious investors and contribute to the region’s long-term economic growth.
Process of Applying for Subsidies
The application process to access these subsidies is streamlined, but thorough. Entrepreneurs must begin by registering their business through the DPIIT (Department for Promotion of Industry and Internal Trade) portal or the Jammu and Kashmir Industrial Development Corporation (JKIDC).
A step-by-step guide for applying:
- Register the pharmaceutical manufacturing unit with the state’s industrial department.
- Submit a detailed project report outlining the business plan, investment requirements, and anticipated benefits for the region.
- Complete the application forms for specific subsidies, such as the IDS or PLI schemes, through the respective government websites.
- Attach all necessary documents, including proof of investment, land ownership or lease agreements, and employment commitments.
- Once the application is submitted, it undergoes scrutiny by a committee, with approvals typically granted within 2-3 months.
Impact of Subsidies on the Pharmaceutical Industry in Jammu & Kashmir
The introduction of these subsidies has already attracted major players to Jammu and Kashmir’s pharmaceutical sector. Companies such as Sun Pharma and Cipla have shown interest in expanding their operations to this region, citing both cost advantages and governmental support as key factors.
Additionally, several smaller firms have successfully launched operations in the state, benefiting from lower costs, subsidies, and ease of doing business. As more pharmaceutical manufacturers enter the region, Jammu and Kashmir is gradually positioning itself as a significant contributor to India’s pharmaceutical exports.
Conclusion
Jammu and Kashmir’s industrial policy, focused on subsidies and incentives, is designed to attract pharmaceutical manufacturers and contribute to the state’s economic resurgence. With ample government support, businesses setting up factories in the region can significantly reduce operational costs while benefiting from the expanding pharmaceutical market.
For entrepreneurs looking to enter the pharmaceutical manufacturing space, now is the perfect time to leverage these subsidies and incentives to establish a thriving business in one of India’s most beautiful yet rapidly developing regions
by Admin | Jul 9, 2024 | Uncategorized
The tourism industry in Kashmir is booming, attracting major hotel franchises and brand owners to this “paradise on earth”. As the sector contributes significantly to the region’s GDP, local hotel and land owners must navigate complex legal agreements to protect their interests. This comprehensive guide examines various types of hotel agreements, including franchise, management, and lease contracts, providing crucial insights for business owners in Kashmir’s hospitality sector.
To read more about this topic, check our article on Rising Kashmir at the following link: Kashmir Hospitality: A Businessman’s GUIDE to Hotel Agreements – Rising Kashmir
Here are some key highlights from the article:
- Tourism accounts for 7-8% of Kashmir’s GDP, generating over INR 8000 crores in annual revenue.
- Types of agreements covered: Franchise, Third-Party Operation/Management, Hotel Management, Lease, and Joint Development Agreements.
- Franchise fees typically include initial fees, royalty fees (3-5% of room revenues), and marketing fees (1-2% of total revenue).
- Third-party management fees usually range from 4-6% of total revenues.
- Hotel Management Agreements often include base fees (2-4% of gross revenue) and incentive fees (4-8% of Gross Operating Profit).
- Performance tests in management agreements allow owners to terminate contracts if operators underperform.
- Lease agreements offer stable income for owners but less control over operations.
- Joint Development Agreements (JDAs) allow landowners to partner with developers to construct hotels without significant financial investment.
- Local hotel owners in Kashmir have leverage in negotiations due to high demand for hospitality services.
- The article emphasizes the importance of thorough investigation, evaluation, and negotiation of legal agreements in the evolving hospitality industry.
by Admin | Dec 5, 2023 | Uncategorized
Competitive tendering in the construction, engineering, and logistics sectors of the UT of J&K holds immense importance. These projects not only hold great public importance, but significant public funds are allocated to them. However, beneath the surface of these initiatives lie multifaceted challenges. The root of these challenges often lies in the initial bidding phase, where proposed bidders must adhere to certain Qualifications. With the award of a project to one contractor, challenges and disputes are raised by unsuccessful bidders, often attributing the decision to alleged connivance within the State Department, in the selection process. This situation creates a divergence between initial bidding approximations and the final selection of the winning bidder, leading to conflicts and court litigation between state departments and participating bidders.
On the flip side, once the contract is awarded to a contractor, the state entity holds the authority to assert that the procedures employed by the contractor during contract performance constitute a breach of contract or that the performance of the contractor falls short of the parameters stipulated in the agreement. Factors like force majeure, court interventions, changes in project requirements mid-way or the department’s failure to make partial payments can further complicate the matters. Such situations not only aggravate the challenges faced by both parties but also contribute to a significant extension of the contract timeline. This extended contract timeline, coupled with the challenges of delayed resolution and payments, introduces a ripple effect on project dynamics. The prolonged uncertainty can strain the contractor’s financial stability, impacting their ability to execute the project operations and fulfil contractual obligations. Additionally, the lingering issues, contribute to an atmosphere of apprehension, affecting the overall collaboration between the contracting parties and thus, results in disputes commonly subject to arbitration.
Arbitration clauses, a common feature in government contracts, introduce their own set of complexities. The inclusion of government-nominated arbitrators, raises legitimate concerns about impartiality. The recourse for challenging such appointments or dealing with unresponsive or overburdened Govt. appointed arbitrators involves a detour through the courts, consuming valuable time and resources. The Supreme Court, while recognizing the well-established principle that appointment is required to be done as per the terms and conditions of the contract, held that if circumstances exist, an independent arbitrator may be appointed as an exception to the general rule if there is reasonable apprehension of bias and impartiality. In cases where the parties cannot mutually agree on an arbitrator, they are compelled to invoke
Section 11(6) of the Arbitration and Conciliation Act, 1996, for the appointment of an arbitrator through the court, a process that typically extends over several months. This delay, not to mention the subsequent initiation of arbitration proceedings, significantly undermines the purpose of opting for arbitration as a quick and efficient dispute resolution mechanism. Moreover, the courts are engaged in lengthy inquiries into the validity and effect of the arbitration agreement/clauses before referring parties to arbitration, which severely delays the matter. Recent amendments aim to streamline this process; however, in practice, parties can file multiple applications and delay proceedings, both before and after the closure of arbitration proceedings. Even if these applications are ultimately dismissed on merit, the process of filing applications, serving the other side, hearing applications, and seeking an order on these applications is used by the parties to buy time in a judicial system that is significantly overburdened.
In this intricate web of challenges, the importance of robust arbitration mechanisms cannot be overstated. The intervention of the court cannot be eliminated, as those are statutorily enshrined under the Arbitration and Conciliation Act. The comprehensive solution to the array of issues discussed in the article lies in fully embracing and resorting to institutional arbitration. Institutional arbitration not only addresses concerns related to bias, non-performance by contractors, payment-related issues, and delays in government contracts but also introduces a systematic framework. Typically, institutional arbitration has its own rules that govern the procedure that would be followed. The Government of J&K has recently established the Institutional Arbitration Centre, namely the Jammu and Kashmir International
Arbitration Centre (JKIAC), which could prove beneficial to counter such issues. The advent of institutional arbitration, exemplified by the J&K International Arbitration Centre (JKIAC), brings a structured
approach to dispute resolution. With a diverse panel of experts covering fields such as law, medicine, engineering, information technology, town planning, etc. to assist in the arbitral proceedings, JKIAC may provide a cost-effective alternative to protracted court battles. For dealing with the arbitration proceedings in the Centre, the Jammu and Kashmir International Arbitration Centre (Arbitration Proceedings) Rules, 2020 have been framed by the High Court. Despite these massive developments, most arbitrations in J&K are still conducted on an ad hoc basis. To fully leverage the benefits of institutional arbitration, suggested arbitration clauses in government contracts explicitly mentioning institutions like JKIAC in the following format may prove beneficial:
“Any dispute, difference, or claim arising out of, in connection with, or relating to the present contract or the breach, termination, or invalidity thereof shall be referred and settled under the Jammu & Kashmir International Arbitration Centre (Arbitration Proceedings) Rules, 2020, by one or more arbitrators appointed by its rules”.
In the framework of institutional arbitration, the administration of Arbitration falls under the purview of the Arbitration Institution. The institution’s panel of arbitrators typically comprises experts from various fields and this setup empowers parties to nominate an arbitrator possessing the requisite skills, experience, and expertise for a quick and effective dispute resolution process. The institution retains the right to refuse an appointment, on request, if it deems the nominated Arbitrator lacks the necessary competence or impartiality. Arbitration institutions oversee the entire arbitration process, starting with notifying the defending party about the Claimant’s request for Arbitration and extending the notification of the arbitral award to all involved parties. Institutional arbitration, therefore, offers a structured, impartial, and cost-effective alternative, providing support and expertise throughout the arbitration process. The recent legislative amendments, particularly in 2019, signal a shift towards institutional arbitration as a preferred mode, aiming to expedite resolution and reduce court interference.
In conclusion, achieving effective dispute resolution in J&K government contracts demands equilibrium. Addressing the aforementioned issues necessitates a comprehensive approach, including streamlined dispute resolution mechanisms, timely payments, and a proactive review of compensation policies in situations not attributable to the contractor. At a broader level, a thorough understanding and adherence to contract requirements, project timelines, and payment provisions by the contractors is essential for successful contract execution. Proactive identification of variations, coupled with transparent communication and timely responses from the departments, significantly contribute to the seamless operation of government contracts. The careful construction of arbitration clauses, along with the integration of institutional frameworks such as JKIAC (Jammu and Kashmir International Arbitration Centre), emerges as a key strategy for unlocking smoother and more efficient contract execution and dispute resolution in the dynamic landscape of the UT of J&K.
The authors, Adv. Romaan Muneeb, Partner at “Malik and Romaan Law Offices, Srinagar, J&K,” along with Associate Adv. Areeba Ahad, are lawyers at the J&K High Court. The authors can be reached at malikandromaan@gmail.com