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August 24, 2018
2 years

What is the issue?

  • “Act East Policy” promises to be a harbinger of economic transformation for the north-eastern states in India.
  • For this to materialise, the region requires a mix of infrastructure investments and trade facilitation measures.

What is the history of trade in the region?

  • The north-eastern region used to be a hub of thriving mercantile activity in the colonial period, but the dynamics of trade was purely driven by colonialists.
  • Expansionist imperial ambition and quest for commercial gains saw the people of the region getting completely bypassed in terms of economic opportunity.
  • Notably, back then a diverse portfolio marked trade with the north-east, where British woollens and Indian cottons were traded for Chinese tea and silk.
  • In the regions, “Cotton, jade, teak, tamarind and jiggery” where imported from Burma, while “cars, whisky, soaps, cigarettes” where imported from Europe.
  • Dhaka was a flourishing centre of muslin exports and discovery of tea and oil in Assam significantly enhanced commercial prospects.
  • The region dominated global tea trade for close to eight decades and the British even established a rail link between Digboi and Chittagong.
  • Nonenetheless, steam navigation Companies pressured the government and prevented the development of any major land route across the region.

What is the current situation there?

  • There was a disruption in trade in the post-Independence period as boundaries of sovereign nations were redrawn.
  • Subsequent government policies have helped in overcoming some of these constrains, but a lot more remains to be done.
  • Bangladesh - India’s trade with Bangladesh in 2017-18 was $9 billion, of which, nearly 70% was transacted across the land customs stations.
  • The 24x7 operationalisation of the integrated check-post last year has given a further impetus to trade, though teething troubles remain.
  • India exports cotton, vehicles and cereals to Bangladesh and imports textiles and apparels from there.
  • Myanmar - In contrast to Bangladesh, India’s trade with Myanmar was a paltry $1.5 billion last year, a drop from $2.1 billion in 2016-17.
  • Trade across comodities was liberalised only recently and India currently accounts for less than 1% Myanmar’s total land trade.
  • Pharmaceuticals is the largest export from India, while we import beans and cereals from Myanmar.
  • Integrated check-post at Moreh (Manipur), is the only major trading point, although some informal channels function along the Mizoram border.

What are the plans to enhance trade through the region?

Transport Infrastructure:

  • In order to galvanise trade through the north-eastern region, a mix of infrastructure investments and trade facilitation measures are warranted.
  • A blue print of transnational multi-modal connectivity projects has already been prepared and several of these projects are already being executed.
  • Kaladan Multimodal highway, and the “North Eastern Railway Link” project  for connecting Aizawl and Imphal are some of the significant ones.
  • Work for construction of broad gauge connectivity from Agartala to Akhaura near Chittagong has recently been awarded.
  • This will substantially reduce the distance between Agartala and Kolkata and provide an efficient access to Chittagong port.
  • A north-eastern economic corridor is proposed under the Bharatmala project for enhanced intra-regional connectivity.
  • Further, Multi-modal freight movement is also proposed through seven waterway terminals on Brahmaputra.

Supporting Infrastructre:

  • Developing a robust supply chain and logistics infrastructure is vital for ensuring a smooth and functional transportation network.
  • Centre has already notified logistics as an infrastructure investment and logistics hubs across the north-eastern region are likely to be developed soon.
  • India could also emulate the Chinese model of establishing production centres near the border to penetrate cross-border markets.
  • “Land Port Authority of India” has declared its intent to take over all land customs stations and upgrade them to integrated check-posts.
  • These initiatives need to be supported with IT infrastructure, quality testing labs, quarantine facilities for agricultural trade, banking and forex services.

How can people be engaged?

  • The fact that there are ties of kinship across the border is surely an asset, which can be capitalised if the people of the region are involved in the process.
  • A special outreach and capacity building programme would be required for building foreign trade capabilities among the local masses.
  • A strong linkage with mainland manufacturers and traders will be a crucial ingredient for a successful export strategy.
  • Some local value-addition near the border through packaging or assembling facilities could also be established.
  • Regular buyer-seller meets between border states of north-east and Myanmar and Bangladesh in pre-identified verticals would also be useful.

What is the way ahead?

  • While development of manufacturing capabilities in the north-east will take some time, it has the potential to serve as a model for export-led growth.
  • A north-east trade development authority, involving all State CMs of the region, would help bring foreign trade agenda on the economic priority.
  • ASEAN has demonstrated how efficient economic integration of a region, even with economies at different levels of development, can be mutually beneficial.
  • In this context, the north-eastern region needs to evolve a comprehensive bottom-up strategy of export development for achieving overall progress.


Source: Business Line

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