Fresh company incorporations in Jammu & Kashmir (J&K) eased for the second straight in June amid heightened India-Pakistan tensions in the aftermath of the Pahalgam terror attacks and Operation Sindoor.
Only 93 new companies were registered in J&K in June, a 22% decline from 119 a year before, showed the latest corporate affairs ministry data. Registrations fell by a similar 22% to 117 companies in May, reversing a 16% rise in April.
In contrast, total incorporations of companies across the country, year-on-year, jumped almost 49% in April, 29% in May, and 8% in June, showed the data.
Despite the prevailing uncertainty, senior government officials are anticipating a recovery in the business environment in J&K soon, underscoring strong medium-to-long term growth prospects in the region.
ET reported in April that investors had rushed to set up new businesses in J&K, with the tally of operational enterprises there surging nearly threefold in five years, especially after the abrogation of its special status in August 2019.
However, the Pahalgam attacks on April 22 by a faction of Pakistan’s Lashkar-e-Taiba terrorist group, which killed 26 civilians, severely vitiated the business environment in J&K.
The Modi government blamed Pakistan for the latter’s continuous support to spreading terror activities in India and launched Operation Sindoor from May 7-10 before agreeing to pause at Islamabad’s request.
Despite concerns over J&K’s investment climate over the short term, experts and officials reckon that a sustained development push by the Centre, drop in overall terror incidents since the 2019 repeal of Article 370 despite the latest attack, new incentive schemes, and heightened efforts by local authorities to address businesses’ concerns would continue to lure investors into J&K over the medium-to-long term.