Kashmir’s Idle Factories Seek Compensation

19 October 2009
The Financial Times

Kupwara: The once noisy machinery at Kashmir Marble Industries has been quiet for nearly two decades. Inside the factory, near the line separating the Indian-controlled side of Kashmir from the Pakistani side, a large crane stands immobile at the centre of the walled compound, surrounded by scattered marble blocks. In one of the wooden buildings in the compound, a huge marble-cutting saw is bound in cobwebs and bird droppings. Blackened generators and transformers have been pushed into dark corners. Across Kashmir lie numerous factories, warehouses and hotels that were seized and hastily converted into barracks for an influx of Indian troops after 1989. As militant violence has subsided in the Himalayan state, the Kashmir Chamber of Commerce and Industry has begun pushing New Delhi to compensate private business owners for their losses in an attempt to restore confidence and to spur investment. On a recent afternoon, troops from India’s Central Reserve Police Force were napping in the compound, surrounded by Kashmir Marble’s ruined machinery. They are the latest soldiers to have lived in the factory since it was commandeered from its owner, Adbul Qayum Lone, in 1990 at the height of the separatist insurgency that turned Kashmir into one of world’s most militarised regions. “We had to vacate with only the clothes we had,” Mr Lone recalls of the night he was roused from his sleep and ordered to leave his factory, which is on one of the key routes young Kashmiri men used to reach Pakistan to obtain arms and military training. Ever since, Mr Lone has battled Indian officialdom, first to reclaim his factory and more recently for compensation for the Rs8m ($173m, €116m, £105m) worth of ruined equipment. “Who is responsible for my losses, if not the government of India?” Mr Lone asks. “They have taken over my possessions and I am told it is in the interest of the nation. But legally and morally, we are right in demanding compensation.” Mubeen Shah, president of the Kashmir chamber, says: “The economy is completely in disarray and when we look towards the future, local people who have the money are reluctant to invest.” Mr Shah, whose own marble factory was seized by Indian troops who have since vacated, says business people are “really fed up”. New Delhi is certainly keen to improve Kashmiri growth, which is crucial to creating jobs and deterring a new generation of frustrated youth from embracing insurgency. Since his election in January, Omar Abdullah, the chief minister, has made impassioned appeals to Indian corporations to invest in Kashmir. But even as Mr Abdullah seeks to woo big business, Kashmir’s entrepreneurs are demanding greater support for companies that they say must drive the local economy. In addition to compensation, the Kashmir chamber wants New Delhi to offer investment insurance in case Kashmir’s political situation again deteriorates and waive about $125m in debts owed by local business people to state banks. “A lot of assets have been created that are lying idly,” says Bilal Kawoosa, a member of the chamber’s board. “They can be put to immediate use, but we need some working capital. The fault does not lie with the promoters; the fault lies with the situation.” In recent years New Delhi has paid some Kashmir business owners for the use of their properties. Three years ago, Mr Lone received $250,000 for 14 years back “rent” and he now gets Rs12,000 ($260) a month for the use of his compound. Haseeb Drabu, chief executive of Jammu & Kashmir Bank, says compensating businesses would be tough given the difficulty of assessing losses. He says that improving infrastructure, including power supplies and the local policy framework, is more crucial. Accounting calculations may not be the biggest obstacle to compensation, says Mr Shah. “Privately officials tell you, ‘If we give you this money, it’s going to go to the separatists.’ They consider every Kashmiri to be a separatist.”