Jammu and Kashmir as an Investment Case Study: One Year After Operation Sindoor
Capital is pricing an outdated security map. The risk has moved, and the data shows where.
Six years after the abolition of Article 370, and one year after the Pahalgam attack and Operation Sindoor pushed India and Pakistan into their most direct military confrontation since 1971, Jammu and Kashmir remains a paradox for investors. New Delhi has marketed the Union Territory as India’s next industrial frontier, backed by a liberalised land regime and an aggressive investment policy. The data confirms real momentum, but it is unevenly distributed, and that unevenness is not random. It tracks a security geography that has itself moved since 2021, from the heavily garrisoned Kashmir Valley into Jammu division’s forested interior. This piece asks whether the risk premium investors currently apply to J&K still tracks where the actual risk sits, or whether capital is lagging a map that has already changed.
Geography and Demography: Why Jammu Is Not One Thing
The Pir Panjal Range is the operative fact of J&K’s political geography. It forms the natural wall separating the Kashmir Valley from the Jammu plains, and its folds contain Rajouri and Poonch, while the Great Himalayan extension does the same for Doda and Kishtwar further east. This matters because Jammu division is routinely treated as a single Hindu-majority unit, when it is demographically split by the same mountains that divide it strategically. Jammu, Kathua, Samba and Udhampur are Hindu-majority plains districts. Rajouri, Poonch, Doda, Kishtwar and Ramban are Muslim-majority hill districts, home to ethnically distinct Gujjar, Bakarwal and Pahari communities rather than Kashmiri Muslims, but religiously and geographically closer to the Valley than to Jammu city. Reasi splits almost exactly down the middle, at 49.7% Muslim to 48.9% Hindu (Census of India, 2011). The distinction is not academic for an investor reading district-level data. A firm sitting a plant in Jammu city or Samba is operating in a genuinely different risk environment from one sitting in Doda or Poonch, even though both fall under the single administrative label “Jammu division” that most investment summaries use. Treating the division as one unit, which is how most publicly available investment data is currently reported, obscures exactly the variation that matters most for a granular risk assessment.
What Actually Changed: Land and Labour
Two liberalisations underwrite the investment pitch, and they are frequently conflated in coverage, so precision matters. On land, the Jammu and Kashmir Reorganisation Order (Adaptation of State Laws), 2020, replaced “permanent resident” with “domicile” as the qualifying status for public employment (Government of India, 2020). Separately, the Adaptation of Central Laws Third Order, 2020, repealed Section 4 of the Alienation of Land Act, 1938, and Section 20A of the Big Landed Estates Abolition Act, 1950, both of which had barred land transfer to non-State Subjects, and stripped the “permanent resident” clause from the J&K Development Act, 1970, without replacing it with a domicile requirement (Government of India, 2020). On the letter of the law, any Indian citizen, not just UT domiciles, can now buy land in J&K. On labour, J&K is among the 23 states and UTs that have notified rules under the Centre’s four consolidated labour codes, which came fully into force on 21 November 2025. Locally, this has taken the form of the Jammu and Kashmir Industrial Relation Rules, 2026, and the Occupational Safety, Health and Working Conditions (J&K) Rules, 2026, both aimed at simplifying compliance for incoming industry (Government of J&K, 2026). Legal access to land and a modernised labour framework are necessary conditions for investment. They are not, on their own, sufficient ones, which is where the risk picture below becomes relevant.
The Risk Has Moved, Not Disappeared
Since 2019, the Kashmir Valley’s security posture has intensified sharply, and militant groups have responded exactly as a rational actor facing a saturated theatre would: they relocated. ACLED’s assessment is direct on this point: amid tightening restrictions in the Valley, the focus of militant activity has shifted decisively into Jammu division, specifically into the Pir Panjal belt of Rajouri and Poonch and the Chenab valley belt of Doda and Kishtwar, both remaining accessible from the Valley across mountain passes even as the Valley itself became harder to operate in (ACLED, 2026). A senior J&K police officer, describing the pattern that produced the 2023 Rajouri-Poonch violence, called it “a 2003 redux” of Operation Hill Kaka, the code name for a similar militant consolidation in the same forests two decades earlier. The mechanism is straightforward: once the Valley became difficult to hold ground in, militants needed a second theatre close enough to retain pressure on security forces without re-entering the most heavily patrolled ground, and Jammu’s dense, high-altitude forest cover, unlike the Valley’s, does not lose its usability to winter snow. Maintaining troop density in both the Valley and an expanding Jammu forest belt simultaneously is a harder resourcing problem than holding either alone, and this is precisely the risk that current investment patterns do not yet appear to price in at the district level, since capital continues to treat “Jammu” as a single, comparatively safe unit even as its own interior increasingly resembles the theatre firms are trying to avoid. The June 2024 attack on a bus carrying Hindu pilgrims in Reasi district, which killed nine people (CBS News, 2024; Al Jazeera, 2024), and the April 2025 Pahalgam attack in which militants segregated men from women before opening fire (Bukhari, 2025), together illustrate both the geographic spread of militant activity and its deliberate targeting of civilian economic activity. Operation Sindoor followed in May 2025, with India striking targets in Pakistan and Pakistan-administered Kashmir (Drury, 2025; Das and Peshimam, 2025). The broader regional escalation, including India’s suspension of the Indus Waters Treaty (Reuters, 2025a; NPR, 2025), has compounded the investment risk calculation in ways that operate beyond the district level. This is also why the “Jammu is safer” heuristic, however reasonable it looked in 2019, is aging poorly as a sitting rule. It was formed in a period when Jammu’s plains and forests carried roughly the same, low risk profile. Six years on, that is no longer true, and a heuristic built for one risk environment is now being applied to two.
Investment, Employment and the Gap Between the Two
Cumulative investment in J&K since 2019 is split roughly two-to-one in Jammu’s favour, and the trajectory has widened rather than narrowed each year since. Officials attribute this mainly to freight cost and terrain rather than to the 2019 changes themselves, which is plausible, but the district data above suggests firms may also be pricing an outdated version of Jammu’s risk profile, treating the whole division as the safe alternative to Kashmir rather than distinguishing its plains from its forested interior. Foreign capital has stayed away almost entirely, with cumulative FDI equity inflows since 2020 the lowest of any Indian state or UT, and a wide gap between announced and materialised domestic investment as well. Employment generated under the industrial policy has grown, but officials themselves note a shortage of skilled local labour in Jammu, meaning investment has not yet closed the employment gap that, in border districts, analysts connect to vulnerability to militant recruitment networks. This is compounded by budget allocation: security spending takes over a fifth of the UT budget against roughly 4% for health (Government of J&K, Budget Documents, 2025-26), a ratio that leaves the same interior districts now recording new investment and new militant activity thinly served on the development side that would normally counteract local disaffection. The Reasi bus attack in June 2024 (Majid, 2024) further illustrated the vulnerability of civilian economic activity in precisely the districts where investment is being actively promoted.
Assessment
None of this argues J&K is a low-risk destination. It argues the current discount is misallocated rather than simply too high, applied broadly against the Valley while lagging the district data showing Jammu’s interior as the actual zone of escalating risk. The October 2025 revival of the Darbar Move, the biannual shift of the civil secretariat between Srinagar and Jammu, and the completion of direct Vande Bharat rail service linking Jammu, Katra’s Vaishno Devi shrine and Srinagar are genuine integrative developments, but the latter also quietly erodes Jammu’s historic position as the only practical route into the Valley, a variable investors banking on Jammu’s gateway advantage should not treat as permanent. A more granular, district-resolved risk model, one that separates Jammu’s plains from its forests, would likely serve capital better than a flat regional discount calibrated to a security map that has already moved on. The broader lesson travels beyond South Asia. National or even state-level risk indices are built for aggregates, and they routinely miss exactly this kind of intra-region divergence, where districts inside the same legal and fiscal regime carry meaningfully different risk profiles. Sri Lanka’s post-conflict investment history is instructive here for comparison: its investment-freedom index tracked closely with the trajectory of its peace process rather than with any static score, rising during active negotiations and falling as the conflict intensified. J&K’s data suggests the same dynamic operating at district resolution rather than national resolution, which is the level at which most political risk products are still built to measure it.
References
ACLED (2026) ‘In Jammu and Kashmir, New Risks for Security Forces and Civilians Threaten Regional Peace’, Armed Conflict Location and Event Data Project.
Al Jazeera (2024) ‘At least nine killed after attack on bus in Indian-administered Kashmir’, 9 June.
Bukhari, F. (2025) ‘Militants in Indian Kashmir segregate men from women and children before opening fire’, Reuters, 23 April.
CBS News (2024) ‘Militants attack bus in India-controlled Kashmir, kill 9 Hindu pilgrims, police say’, 10 June.
Census of India (2011) District-level demographic data, Office of the Registrar General and Census Commissioner, Government of India.
Das, K.N. and Peshimam, G.N. (2025) ‘Who are Pakistan-based LeT and JeM groups targeted by Indian strikes?’, Reuters, 7 May.
Drury, F. (2025) ‘What we know about India’s strike on Pakistan and Pakistan-administered Kashmir’, BBC News, 7 May.
Government of India (2020) Jammu and Kashmir Reorganisation (Adaptation of State Laws) Order, 2020, Ministry of Home Affairs.
Government of India (2020) Adaptation of Central Laws Third Order, 2020, Ministry of Home Affairs.
Government of J&K (2026) Jammu and Kashmir Industrial Relation Rules, 2026, and Occupational Safety, Health and Working Conditions (J&K) Rules, 2026, Government of Jammu and Kashmir.
Government of J&K (2025) Budget Documents 2025-26, Finance Department, Government of Jammu and Kashmir.
Majid, Z. (2024) ’10 dead as bus plunges into gorge in J&K’s Reasi after terror attack’, Deccan Herald, 9 June.
NPR (2025) ‘With Indus Waters Treaty in the balance, Pakistan braces for more water woes’, 8 July.
Reuters (2025a) ‘India starts work on hydro projects after suspending treaty with Pakistan, sources say’, 5 May.
