Mandatory Local Hiring Proposal in J&K Budget Triggers Industry Pushback

A budgetary provision making it mandatory for industries to prioritise the hiring of local youth in order to retain government incentives has sparked concern among business owners in Kashmir, who argue that the regulation is difficult to implement due to shortage of skilled manpower.

Among the key features of the Jammu and Kashmir Budget 2026–27, released by the Finance Department, is a stipulation requiring industries availing government concessions to ensure priority employment for local youth. While the government has projected the move as a measure to protect local jobs, industrialists contend that the policy does not adequately factor in the region’s acute shortage of skilled local manpower across sectors.

Javed Ahmad Tenga, president of the Kashmir Chamber of Commerce and Industries, says industries across Jammu and Kashmir remain heavily dependent on non-local workers due to persistent gaps in skill availability. “There are more than two lakh non-locals employed across different industries in Jammu and Kashmir,” he says. “The core problem is the absence of a proper ecosystem for skill development. Training has to start early—right from the school level—if locals are to be absorbed by industry. At present, we are short on manpower across sectors,” Tenga adds.

The skill gap

Different sectors are facing the shortage of manpower. A recent data has noted that Jammu and Kashmir’s overall unemployment rate stands at 6.7 per cent, significantly higher than the national average of 3.5 per cent, but a 2025 Baseline Survey conducted by the Labour and Employment Department under Mission Yuva has revealed that nearly 76 per cent of the workforce in the Union Territory of Jammu and Kashmir is unskilled.

The Mission Yuva findings,  separately released in January this year as part of an assessment of the region’s employment and entrepreneurship ecosystem, note that unemployment in J&K is not merely a function of limited job availability or access to finance. Instead, the assessment highlights a deeper disconnect between aspiration and access—where entrepreneurial intent exists, but institutional systems to nurture it remain weak. “Entrepreneurship was constrained by fear of failure, lack of guidance and limited awareness of schemes and credit products. Many youth perceived enterprise creation as risky, bureaucratic and inaccessible, preferring low-paying daily wage work over uncertain entrepreneurial journeys,” the Mission Yuva findings noted. 

Haji Mohammad Muzafar, who runs a cold storage unit in South Kashmir’s Pulwama, says nearly 25 per cent of his workforce—out of more than 125 employees—comprises non-local workers. “Certain specialised roles cannot be filled locally. Non-locals are more skilled, which is why we are forced to hire them,” he says. “The government needs to build infrastructure and ensure the availability of skilled manpower, which is currently not happening.”

Sarwar Malik, who operates a mineral water manufacturing unit in Pulwama, echoes similar concerns. He says his unit employs nearly 10 per cent non-local staff. “About 90 per cent of my workforce is local. The remaining 10 per cent are non-local machine operators with specialised technical skills,” he says, adding that such roles cannot be filled without proper training.

Not meeting industry needs

Aijaz Qureshi, who runs a cold storage unit in Lassipora, says the government must first ensure the availability of industry-ready manpower if industries are expected to adhere to the new rules. “Several Industrial Training Institutes have been opened, but they have failed to produce workers who are ready for industrial requirements,” he says. Qureshi also flags delays in government incentives. “There are several industries with subsidies pending worth several crores. Many units have been struggling for years due to unpaid incentives,” he adds.

Officials associated with Industrial Training Institutes (ITIs) in Kashmir, however, contest the industry’s claims and say that adequate manpower is being produced. Bilal Ahmad Wani, principal of ITI Anantnag, says the onus lies on industries to absorb trained local youth. “At our institute alone, we produce around 600–700 skilled trainees annually,” he says. “We are running skill development programmes and preparing candidates to be industry-ready for multiple sectors, including textiles and hardware.”

While the government views the local hiring provision as a necessary intervention to safeguard employment opportunities for residents, industrialists warn that without substantial improvements in skill development, training quality, and alignment between education and industry needs, the policy could place additional pressure on local industries already grappling with labour shortages and financial constraints.