A robust economic strategy and a tie-up with East Asia will make India a competitive alternative to China
By Akshay Mathur
In May this year, the Congress party won its third straight victory at the hustings in Assam. By itself, the event is liable to be dismissed as another victory in a far-away state. But this win has a different complexion: It is for the first time in three decades, that the Congress is presiding over the fate of Assam that is at peace.
This is a historic opportunity for the country to launch a bold peace-time initiative in the North-East that will provide an economic, diplomatic and security boost not just to India’s eastern flank, but to our global ambitions to be a relevant Asian player and a competitive regional alternative to the Chinese juggernaut.
What’s needed is a robust regional economic strategy coupled with new international trade relationships for the North-East that will provide a viable option to the limited trade and travel opportunities through the expensive “Chicken’s Neck” route to the rest of the country.
One such option could be a “Seven Sisters Corridor” modelled on the Rs4 trillion Delhi-Mumbai Industrial Corridor (DMIC), which is already dramatically changing the landscape of India’s western hinterland. In the North-East, a similar mega infrastructure project —requiring a basic investment of Rs11,000 crore (not including land and power)—will link the Seven Sister states of the region to each other and to multiple border points with contiguous neighbours such as Bangladesh, Myanmar and Bhutan. Like DMIC, an exemplary foreign-policy initiative with Japan as a 50% partner with the Union government, the corridor could partner with Thailand, a country with which India is in the process of signing a free trade agreement (FTA), and whose government has expressed interest to partner with India. Major Thai companies such as Italian-Thai Development PCL and the CP Group have the necessary expertise to develop infrastructure and small-scale industries such as food processing. At $85 million, it is already one of the largest South-East Asian foreign direct investors in India, even topping China, and the potential is many times greater still.
The plan (see map) will provide high speed road, rail, and air connectivity, land for industrial regions and complementary housing needs, access to ports for trading goods, financing for start-up entrepreneurs, broadband and telecom access for businesses, and security to people.
To accomplish this, the North-East region must first be stabilized using the triumvirate of diplomacy, development and policing—a winning strategy that brought peace to Assam. While most of the insurgencies there are winding down, Manipur is still troubled. Repealing the despised Armed Forces Special Powers Act where the corridor would run, will help.
India must then use the diplomacy of mutual interest to draw its neighbours. There is already a base to build on. The Kaladan Multi- Modal Project connecting Sittwe Port (Myanmar) to Lawngtlai (Mizoram) is under way, and this has prompted Bangladesh to open its Chittagong, Ashuganj and Mongla ports to India. In India, integrated checkpoints are being developed at various border points, and the east-west highway from Porbander (Gujarat) to Silchar (Assam) is almost complete.
The corridor’s success will depend on thriving industrial activity developed around it—not just big private firms feeding off the region’s lucrative natural resource base, but small and medium value-added businesses. Food processing, for instance, remains untapped even though the region produces large quantities of rice, sugar, ginger, pineapple, potato, millet—products essential for food security. The corridor will enable building smaller food parks and processing units closer to tier II or III cities and to the farms—a boon to small entrepreneurs and marginal farmers, creating a base of skilled labour and business entrepreneurs. It will also harness the talent of the region’s literate, English-speaking youth who are migrating to other parts of India in droves, manning the front desks of the hospitality business across the country.
The corridor is the ideal place to productively direct the vast subsidies allocated to the region by the Centre and the states, few of which are successful. The Rs70,000 crore committed to the North-East by the 11th Plan will certainly get a better return if blended into the Seven Sisters Corridor budget rather than expecting piecemeal efforts to add up to a grand economic strategy. But banking on the government for financing is neither practical nor appropriate. The initiative needs stakeholders that can invest for the long term. This means private Indian business, and a reliable foreign country partner such as Thailand.
This is a good time for the Congress government to introduce this as its flagship initiative. A new corporate entity to manage the project must be created and the North-East Industrial Policy must be revised to support enterprises on the corridor. The Central Industrial Security Force, which provides security to airports and oil refineries, can also cover the corridor. Finally, the ministry of external affairs must make the corridor an integral part of the Look East Policy and prioritize the completion of the FTA with Thailand.
The Assam elections showed that the North-East is not only a robust participant in India’s democracy, but with imagination, it can play a role in leading an economic transformation from the east.
Akshay Mathur is the geoeconomics fellow at Gateway House: Indian Council on Global Relations, Mumbai.
Graphic by Ahmed Raza Khan/Mint
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