India’s Look East Policy has been a notable success since it was announced in 1991, increasing trade with Asean more than tenfold to more than $70 billion. The rapid rise in trade has led to a new focus on the country’s once-neglected Northeast, which is being transformed into a gateway to East and Southeast Asia.
“It is a transformation from a barrier to a bridge. Northeast India now offers numerous opportunities for foreign investors, particularly those neighbouring countries, whether in infrastructure development, agriculture, food processing or tourism and hospitality sectors,” said Abhijit Barooah, co-chairman of the North East Council of the Confederation of Indian Industries (CII).
Northeastern India had long been considered underdeveloped and politically unstable, and was overlooked in government development plans for many years, Mr Barooah told Asia Focus during a recent seminar in Bangkok.
All that has changed in the past decade. According to data from the CII, over the past five years the northeastern region has been growing at about 8% per year, more than the national average. The central government has even made it a policy that every department has to devote at least 10% of its budgetary allocation each year to the Northeast region.
However, Mr Barooah stressed that the most important success factors will be better infrastructure, logistics services and power generation — areas the Delhi government sees as a priority.
A cornerstone of the new development is the 3,200-kilometre Trilateral Highway, linking Thailand and Myanmar with India, which is scheduled to be completed sometime in 2016, including more than 1,600km of newly built or improved roads.
The upgraded road link, along with upgrading of 71 bridges by India, will allow freight and container trucks to travel from India to Myanmar and down to northern Thailand.
“India is very keen on enhancing its engagement with Asean. Connectivity, either by land or sea, will play a crucial role in boosting trade and investment flows in the region,” India’s Ambassador to Thailand, Anil Wadhwa, explained during the same seminar.
“We are planning to conclude more free trade agreements which will not only cover goods but will expand to include investments and services to reduce trade barriers between India and Asean.”
Mr Wadhwa said Thailand was seen as a “springboard” for Indian investors to jump into Southeast Asia. Currently, there are about 70 Indian companies with total investments worth US$2.5 billion doing business in the Kingdom.
However, the number of Thai companies investing in India is still very limited. Therefore, he encouraged more Thai investors to start looking for business opportunities in India, particularly the Northeast region, where Thai companies have high capacity to excel.
“With its proximity to Southeast Asian markets, and being home to diverse kind of fruits, the Northeastern region has high potential to emerge as major centre for the food processing industry,” Mr Barooah noted.
“Moreover, better food storage systems will enable the region to deal with a relatively high food waste problem in the area. I believe this will provide a lot of opportunities for foreign companies.”
He said proper storage facilities were essential to extend shelf life and reduce waste, not only for fruits and vegetables but also for many other resources. As well, quality control is poor and branding knowledge limited among local people. This is an essential field in which Thai companies have high potential given their experience in food processing, packaging and adding value to products, said Mr Barooah.
Northeast India is also home to about two-thirds of the country’s bamboo resources spread over 3 million hectares. According to data from the United Nations Industrial Development Organization, India has 30% of the world’s bamboo resources but only a 4% share of the global bamboo market. This is mainly because of low productivity.
Bamboo in the Northeast is usually put only to traditional uses, such as handicrafts and paper-making. The government has announced a mission to promote the Northeast for bamboo-based industry, which will provide huge opportunities for investors.
With many essential infrastructure developments under way within the region of about 44 million people, and the building of further connectivity between the Northeast and the rest of India and with Asean, the economic potential of this area offers numerous opportunities.
Being potentially one of the richest geographical areas of the country with rich natural resources of both food and energy, the Northeast is a strategic location for international trade. With the right approach to marketing and rebranding, Northeast India is going through a transition to become a business and tourism hub of South Asia as well as a corridor and transit route to Southeast Asia.