The North East: Hidden Economic and Trade Potential

Siddhartha Mitra

Director (Research)

Structure of Presentation

Map and related discussion

Strengths

Drawbacks

Unutilised opportunities

Recommendations

Source: IBEF

North East and Neighbouring Countries

North East: Many Strengths

Rich in mineral and water resourcesFacilitates power generation Makes industrialisation easier Boost to agriculture Alternative mode of cheap passenger and cargo transport

Fertile Soils

Mountainous terrainFacilitates generation of hydel power Non extreme climatic conditions Gives a boost to cultivation of valuable cash crops such as tea

North East: Many Strengths

Population is more literate than the rest of India

Pressure of population on land is lower: 3.8 percent of the country’s population and 7.9 percent of its area

International borders with China, Bangladesh, Bhutan, Nepal and Myanmar

Can be a major participant in cross-border trade

Can act as an entrepot economy, facilitating trade for other countries and regions

With its natural beauty offers great scope for tourism

North East: Many Strengths

English literacy much higher than the rest of India Facilitates cultural and business interaction with

the the rest of the world

Can be used to promote tourism from the Anglo-Saxon world ( United Kingdom, Australia, New Zealand and North America)

Source of English teachers for the Rest of India and neighbouring countries

Drawbacks

Distance from the Central Government

Feeling of alienation

Poor communication with the Central government

Access for goods by land very difficult

Connected to the rest of India by a 22 km wide stretch of land called the chicken’s neck

Goods have to travel parallel to Bangladeshi border and enter through the chicken’s neck – high transportation costs

Drawbacks

Cultural dissimilarities with the rest of India

Terrorism Discourages investment, especially from the rest of

India

Cripples industry

Vicious cycle: Poor employment generation contributes to terrorism which in turn hampers investment and consequently employment generation

Tribal, ethnic and cultural conflicts

Drawbacks

Mountainous Terrain

Abets terrorism Makes transportation and communication difficult

o has 45.7 Km. of road length per 100 sq km of area as against the country average of 62.8

o vastly lower teledensity than the rest of India

Formal trade facilitation with bordering countries is very poor

Unutilised Opportunities

Power generation: 1,011 MW out of a total potential of 63, 257 MW utilised

Potential for tourism

Accounts for less than 1 percent of domestic and 0.5 percent of foreign tourist arrivals in India

Terrorism and lack of promotion of tourism have been important reasons

Recommendations for the future

Boost to trade facilitation is needed

More cross border trading points and installation of modern facilities for faster and smoother transit

Should have functioning international airports with flights to neighbouring countries

Active export promotion of North Eastern products in neighbouring countries – handicrafts, tea, rubber, silk products etc

Power trade with neighbouring undulating Bangladesh will help North East’s power plants attain economies of scale

Recommendations for the future

Transit can be provided for Bangladeshi products to Nepal, Bhutan, China etc: emergence of North East as an entrepot power

Cheap port facilities in Bangladesh can be used for exporting North Eastern products and importing items of consumption and valuable raw material inputs

Mutually beneficial exchange of human and physical capital with Bangladesh/other neighbours