Frequent high-speed internet shutdowns, cuts in telephone communication, curfews and the safety of her employees are things that affect her online arts and crafts shop, Crafts World Kashmir. “The risk factor for us business owners is very high. You never know when the situation might completely change and Kashmir shuts down. Internet shutdowns without any prior information is what affects us the most, and this usually shuts down our business completely. We have not taken any financial help from anywhere and due to this, when the situation gets bad sometimes, we have to meet the expenses from our own savings,” says Khan, 32.
Investors are hesitant about financing these MSMEs as they feel the risk-to-reward ratio does not make sense for them. Those who do have to also be prepared to deal with the uncertainty.
Anuj Sharma, the founder and CEO of ALSiSAR Impact, who has invested in Kashmiri-based courier startup FastBeetle, says, “Due to it being a conflict zone, it is very difficult for these businesses to get an investment. The instability of politics and law and order is what dissuades investors and makes them worry about getting returns on their investments. But we decided to do an impact-based investment in Kashmir and considered it as a social experiment to promote MSMEs and help them attract private investors.”
Lack of connectivity paralyzes operations
Access to funds is not the only main worry of the MSMEs in Kashmir. SMEs that focus on e-commerce and rely on online platforms for marketing and advertising face crippling difficulties because of the frequent internet cuts, especially when high-speed internet connections are suspended. This leads to a huge decline in sales. Many have even had to change their business model to survive.
This has been a problem for the people of Kashmir since 2012, when the first recorded internet shutdown happened. Software Freedom Law Centre (SFLC), an online legal services organisation, has stated that Kashmir had more shutdowns than any other state. Over the past five years, the Valley has seen 287 internet cuts, with 116 in 2020 alone. However, the longest the Valley went without internet was in 2019, when services were suspended for 552 days. The situation is getting better now with the numbers coming down to 19 in 2021. But even that is a major obstacle for the MSMEs due to the disruption it causes.
Sheikh Samiullah, founder of FastBeetle, says, “Though there have been fewer internet and telephone cuts since 2019, whenever they do happen, it affects MSMEs very badly. For businesses, the internet is like oxygen these days, and it is absolutely necessary for e-commerce. It also affects the entrepreneurs in the state as many rely on the internet for various things.”
Apart from the conflict, the internet shutdowns also dissuade investors from looking at Kashmir. “Due to the conflict and the variety of factors in play, investors have to be selective about the type of business they get involved with,” says Sharma.
Fear of expansion
Businesses in the Valley have become hesitant to expand their operations because of the fear of curfews and lockdowns. Businessmen with physical stores or wanting to expand retail presence have to think twice before selecting a location. The threat of a curfew is enough to reduce footfall, which can lead to the closure of the outlet.
“We cannot even think of expanding and opening a retail outlet here because we never know when there will be a curfew and when the circumstances change,” says Khan, who founded her business in 2015.
This risk prevents them from spending anything substantial to grow their businesses. All these reasons are why MSMEs in Kashmir are lagging behind those in the rest of the country, and are looking at locations outside the state to expand.
Faheem Bhat, the founder of Srinagar-based Lieper Books, says, “There definitely is a lot of hesitation while growing or initiating a business as people always think about factors like internet cuts. Though circumstances have become better, there is no denying the risk in Kashmir. SMEs should look for growth outside Kashmir and explore the opportunities elsewhere in the country.”
Winding up of businesses and employee problems
These disruptions are bad news for employees too. This is why many Kashmir residents leave the state in search of a job. The Valley has seen many MSMEs shut shop and many people choosing to start businesses elsewhere, or try to pursue jobs in cities outside Kashmir.
Entrepreneurs say during a crisis, many MSMEs could not even get in touch with their employees to understand their circumstances. As employees could not come to work, many businesses could not pay salaries or had to resort to pay cuts.
“It is very common here in Kashmir. Employees find it difficult to report to work due to the curfews, which is why we sometimes follow hybrid work models. If they do not work, the MSMEs cannot pay them. This makes it difficult for them too,” says Samiullah, who started his business in 2019.
Besides pay cuts, many MSMEs in Kashmir have also had to lay off employees to reduce operating costs.
Precautionary measures and requirement of government efforts
Bilal Ahmad Pandow, a consultant at an acclaimed university in Kashmir and author of various articles and papers on the Kashmir conflict, blames internet shutdowns as the main fatality for small businesses. Pandow, who did not wish to disclose the university he is affiliated with, advices businesses to take some precautionary steps to safeguard themselves in this situation.
“In my opinion, the main measure businesses should take is to stock up on required items like raw materials to combat any sort of disruption. Businesses, especially MSMEs, should ask employees who live far away to stay back home if they feel any sort of problem is bound to happen. Sure enough, many businesses are doing these things and have started to cope with these problems,” he says.
The government can ease the crisis pangs by making it easier for the MSMEs to get a registration done and get loans easily. It should also make government enterprises buy their goods from these local MSMEs, he says.
The government, on its part, has taken steps to promote investment in the state. According to a March 2022 PTI report, the Jammu and Kashmir government has received 4,226 investment proposals worth Rs 47,441 crore. These proposals were received as part of a Rs 28,400 crore industrial development scheme announced in 2021.
Though the situation of MSMEs in the Valley is dark, there seems to be a ray of hope. With the situation getting a little less tense over the past few years and people realising the opportunities in small businesses, things have started looking up.