Srinagar, Mar 14: The Federation of Chambers of Industries Kashmir (FCIK) on Saturday expressed serious concern over the potential economic repercussions of the ongoing Iran–US–Israel conflict on businesses in Jammu & Kashmir, particularly MSMEs engaged in handicrafts, horticulture, agriculture, tourism and small-scale manufacturing.
Responding to a request from the Union Ministry of MSME through Development & Facilitation Office, Jammu, seeking industry inputs on the likely impact of the evolving geopolitical situation, FCIK stated that prolonged instability in West Asia could disrupt trade flows, energy supplies and remittance channels, with cascading effects on the regional economy
The Federation conveyed that the handicrafts sector of Kashmir, which sustains a large artisan population and relies heavily on exports, may face significant challenges due to disruptions in international trade routes and delays in remittances from overseas buyers.
Such delays in payments could create liquidity constraints for exporters and traders, eventually affecting thousands of artisans and small producers who depend on timely settlements within the supply chain.
FCIK further informed that rising fuel prices and disruptions in global supply chains are likely to increase logistics costs across sectors. The horticulture industry in particular, one of the principal pillars of the region’s economy, may be adversely affected as higher transportation costs could render the movement of perishable produce to distant markets across the country more expensive and, in some cases, economically unviable. Increased freight charges would inevitably erode margins for growers, CA Stores and traders while also pushing up prices in consumer markets.
The Federation also drew attention to the emerging challenges facing the hospitality sector. Reports of supply constraints and price volatility in LPG and other fuels could disrupt the functioning of hotels, restaurants and catering establishments that rely heavily on commercial LPG for their daily operations. Any prolonged disruption in fuel supply chains could adversely affect the hospitality industry, particularly at a time when the sector was expecting a robust tourist season.
FCIK conveyed to the ministry that the tourism sector itself remains vulnerable to global uncertainty. The volatile geopolitical environment has begun to influence travel sentiment, with concerns that prospective visitors may defer or cancel travel plans.
Any decline in tourist inflows would have a broad ripple effect across the regional economy, impacting hotels, houseboats, transport operators, tour agencies, handicraft retailers and numerous small service providers who depend on tourism-related activity.
FCIK cautioned that MSMEs operating with limited working capital are particularly vulnerable to external shocks. Rising input costs, higher freight charges, delayed export payments and fluctuating demand could place considerable liquidity stress on enterprises across sectors.
In view of these challenges, the Federation urged the Government of India to consider a set of temporary relief measures aimed at safeguarding MSMEs from the immediate economic impact of the crisis.
“These include extensions in statutory compliance deadlines such as GST filings and income tax obligations, deferment or rescheduling of statutory contributions including EPF and ESI, and suitable moratorium or restructuring options for bank loan installments and working capital servicing apart from temporarily suspending all recovery actions by banks under SARFAESI Act.”
FCIK also emphasized the need for ensuring uninterrupted availability of LPG and other fuels for sectors such as hospitality and food services, as well as measures to mitigate rising logistics costs affecting the transportation of horticultural produce to national markets.
The Federation stated that timely policy support and regulatory flexibility would be crucial in helping businesses navigate the uncertainties arising from the current geopolitical developments and maintain stability in economic activity across the region.
