Holding business summits has become a common theme across states, particularly during the last 15-20 years. There are no surprises, therefore, that the northeastern states would also look forward to tapping this opportunity. Assam and Tripura made a beginning in this direction in 2018 and 2021, respectively. This year, all eight states under the North Eastern Council (NEC) will jointly hold the North East Global Investor Summit tentatively in September.
Considering the dramatic improvement in infrastructure over the last decade and the huge state sector investments in energy, it is indeed time for the region to strive for private investments. However, there are concerns if the smaller states will go out shopping with adequate preparations. The Union government is aware of the challenge. Development of North Eastern Region (DoNER) minister G Kishan Reddy already sounded an alarm in this regard.
Learn From Sikkim
The primary problem lies in planning or paucity of it. From an industrialised Gujarat to the emerging Odisha or Uttar Pradesh, the success of an investment summit is directly linked to the preparations made to woo investors. It is indeed a point to ponder that with its political clout, brand image and rich experience in attracting investment, Gujarat takes two years to organise a business summit. In comparison, the ball for the North East summit was set rolling in February, with an aim to hold it in May. The timeline was later revised to September.
Remember that the region barely saw private investment beyond the peripheries of Assam and Sikkim. Assam attracted investment, mostly in fast-moving consumer goods (FMCG), in the last decade, riding on the North East Industrial and Investment Promotion Policy (NEIIPP), 2007 that offered heavy capital subsidy, interest subsidy and tax breaks. NEIIP was discontinued in 2017. The incentives to the existing investors will be withdrawn in 2027. The state now has the tall task to attract investment on merit. The Himanta Biswa Sarma government is gearing up to meet the challenge.
The summit is a shot in the arm for Sikkim to showcase its awe-inspiring transformation over the last two decades. This tiny border state of less than seven lakh people is India’s newest hydropower and pharmaceutical hub. It had also attracted investments in food processing and breweries. That was over and above a thriving tourism sector. According to the Reserve Bank of India, as of 2019-20, nearly 57 percent of Sikkim’s gross state domestic product (GSDP), at current prices, was contributed by industry vis-à-vis 28 percent in Assam, 43 percent in Gujarat and 26 percent in the country.
Gangtok doesn’t feature in India’s summit map. A focused approach and business facilitation held the key to Sikkim’s success. In neighbouring West Bengal, prized investments suffered due to land disputes but summits became an annual event. The result is evident. According to RBI, industry contributed 21 percent of Bengal’s GSDP in 2019-20, less than the national average.
Get The Basics Correct
Investment rides on the ecosystem. The smaller states in the northeast can learn a lot from each other’s experience to get the basics right. If land availability is a problem in the country, it is a bigger problem in the northeast due to abysmally poor land records and high tribal holding, with due restrictions on the access of such land to non-tribals.
Roughly 70 percent of land in Manipur is in tribal areas. Strictly speaking, it is also the only disturbed state in the northeast due to the presence of a large number of outlaw groups which didn’t join peace negotiations. However, the non-tribal Meitei community that dominates the Imphal valley is highly enterprising. The start-up revolution is prominent in this state. There are dedicated angel funds as well.
Manipur was a pioneer to introduce pre-paid electricity meters and improve the power supply scenario. Private enterprise converted Imphal into India’s newest health tourism hub, catering to patients from Myanmar. Compare this with Mizoram, bordering Myanmar and Bangladesh. The 90 percent tribal state has been peaceful since the mid-1980s. But, resistance to change held back their progress.
Non-tribals constitute 70 percent of the population in Tripura which is surrounded by Bangladesh. The political scenario has been the least volatile. Land records are distinctly better. India is making huge investments in Tripura for intra-regional and cross-country connectivity. Agartala airport has been upgraded to international status. BharatNet optic fibre mission and internet gateway through Bangladesh ensured quality digital backbone up to the gram panchayat level. But the state is barely optimising its potential. They allotted a tiny 15-acre space for industrial activities at the Sabroom border where an international rail-road terminal is coming up for access to the Chittagong seaport in Bangladesh.
Tourism Needs Overhaul
According to the Union tourism ministry, over one lakh “foreign tourists” visited Tripura in 2018. This is the largest such inflow in the region. These are Bangladeshis, who use Tripura as a transit state to reach other Indian destinations. Considering Bangladesh is the largest source of medical tourists to India, Tripura had the opportunity to attract investment in private healthcare, retail and hospitality. But that didn’t happen. Poor data doesn’t help the cause. Union government says, over four lakh ‘domestic tourists’ visit Tripura. This is one-third of the traffic to Meghalaya. In reality, tourism is a nearly forgotten chapter in the state. Tripura is no exception in its neglect of tourism. Sikkim and Meghalaya apart, the entire region failed to tap the potential.
With its huge share of forests and mountains and easy connectivity, Assam attracts only 37,000 foreign tourists. This includes oil and gas professionals. Meghalaya is crumbling under the pressure of cheap volume tourism. The state received only 18,000 foreign tourists in 2018, as against 71,000 in Sikkim.
Manipur, Nagaland and Mizoram barely exist on the tourism map. Arunachal was out of bounds for many years due to a paucity of logistics and travel restrictions. This state is now showing maximum interest in turning the corner.
Land is a contentious issue in Arunachal due to community ownership and the involvement of multiple agencies. But they are keen to solve this tangle by acquiring land for the investor. This is indeed the solution that the region should offer. Tamil Nadu came up quickly on the industry map in the 1990s by offering fully developed land, on demand. Meghalaya has already adopted a similar strategy. But its implementation suffers.
Assam Should Shine
In all probability, the summit will be a major opportunity for Assam while most smaller states might end up as travellers. Over the last decade, Guwahati emerged as the regional logistics hub and received some investments, outside the scope of NEIIP, in pharmaceuticals. The city also has a decent population of start-ups. The task ahead is to make the investment flow stronger. The state has little footprint in IT. The post-COVID trend of the IT industry to open shops in smaller cities might help Guwahati.
Pratim Ranjan Bose is an independent columnist, researcher, and consultant. His Twitter handle is @pratimbose. Views are personal, and do not represent the stand of this publication.