Industrial packages are foundational instruments for economic transformation, particularly in structurally disadvantaged regions like Jammu & Kashmir. Their importance extends beyond merely attracting investment they serve as catalysts for comprehensive socio-economic restructuring in lagging states.

India’s industrial landscape remains heavily skewed toward historically advantaged states. Top industrial states Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Delhi contributed 72% of direct taxes in FY24, while underdeveloped states like Uttar Pradesh, Bihar, and Madhya Pradesh contributed only 5%. Industrial packages function as corrective policy instruments by compensating for geographic, infrastructural, and historical disadvantages that impede industrial development in backward regions. They level the playing field by offsetting the natural advantages that agglomerated industrial clusters in developed states possess.​

Manufacturing sectors have significantly higher employment elasticity than service sectors, meaning each unit of sectoral growth produces proportionally more jobs. This is critically important for J&K, where unemployment has surged dramatically in recent years. Approximately 70% of J&K’s population historically depended on agriculture with rising literacy rates, the region requires alternative employment sources. Without industrial packages offering financial incentives, private sector entrepreneurs lack the capital and operational margins to establish manufacturing units in less-developed regions, leaving unemployed youth without viable opportunities.​

J&K’s economy demonstrates a telling structural weakness: while the tertiary (service) sector dominates with over 56% of GSDP, the secondary (industrial) sector has collapsed from 19.30% to 18.30% between 2013-14 and 2024-25. This structural deterioration reflects J&K’s inability to develop manufacturing capacity despite significant agricultural........

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