India’s North Eastern Region is poised to capitalize on its core strengths

What comes to mind when one thinks of the North Eastern Region of India? To the first-time traveler, what may stand out is the beautiful climate, clean air, and verdant forests; availability of a vast variety of fruits, vegetables and spices; low population density; high percentage of working women; and the local population’s expertise in English.

This image is consistent with the more data-driven picture of the North Eastern Region (NER), with its advantages of climate, topography, and human resources, in turn reflected in the potential of its agriculture and service sectors.

Prior to 1947, NER flourished as a trade and commerce hub and was one of the most prosperous regions of the country.  Tea gardens, with the first one established in 1835, spread rapidly, initiating tea exports from the region. An oil refinery in Digboi, Assam, was established in 1890, laying the foundation for early industrial activity. The Dibrugarh-Chittagong railway line was one of the first railway lines in Asia.

NER was well-connected to markets in India and the rest of the world. Global trade was conducted through the Port of Chittagong in present-day Bangladesh and the Port of Kolkata in present-day India.  Both were connected to the region through a network of inland waterways, provided by the Brahmaputra-Barak River Systems and their tributaries, as well as by roads and railways.

But with the division of the Indian sub-continent in 1947, NER became geographically isolated, connected to the rest of India only via the narrow “Chicken’s Neck”-- the Siliguri Corridor in the Indian state of West Bengal. This division caused the interruption of inland water, road, and railway communications through Bangladesh. Today, a consignment of goods from Agartala (Tripura) must travel 1,600 km through the Siliguri Corridor to reach Kolkata.  In contrast, it would need to travel less than 600 km through Bangladesh to reach the same destination , and only 200 km to reach the nearby Port of Chittagong in Bangladesh.

Today, goods from Agartala must travel 1,600 km to reach Kolkata.  In contrast, it would need to travel less than 600 km through Bangladesh to reach the same destination, and only 200 km to reach Chittagong

NER gradually began to lag behind other regions. The longer distance from markets imposed additional time and costs related to transportation and logistics.   It made consumer goods and inputs from outside the region more expensive and rendered NER’s own products uncompetitive in markets outside the region. Consumers in NER faced higher prices as compared, for example, with West Bengal, the nearest Indian state with a seaport.

Becoming less isolated

This picture of NER is now changing. Over the past decade, connectivity agreements with Bangladesh and infrastructure investments in NER and its neighbors -- under the broad umbrella of the Government of India’s “Act East” policy -- are reducing the subregion’s economic isolation. 

Global trends are also very favorable for NER. These include growing incomes, leisure spending, and consumer awareness in India and neighboring countries ; a rising preference for fresh, healthy, safe, environmentally friendly, and socially responsible products; and the growing role of services in manufacturing, increasing demand for skilled resources.

Together, these developments can help NER showcase its strengths in agriculture and services.  NER has an opportunity to develop value chains in these sectors to create sustainable, better-paying job opportunities for the people of NER.  The region can capitalize on rising demand for fresh fruits and vegetables, and for fresh, high-quality spices, especially those produced in an environmentally friendly and socially responsible manner. It can promote bamboo, an environment-friendly resource. It can encourage nature-based tourism, as well as trade in medical and education services. These examples are not exhaustive, but they represent some of the immediate possibilities for the region.

Reports explore region’s potential

All these changes are very positive and hold significant promise for unlocking the economic potential of NER. The World Bank explores some of these opportunities in two new reports: Playing to Strengths: A Policy Framework for Mainstreaming Northeast India and Strengthening Cross-Border Value Chains: Opportunities for India and Bangladesh.

Playing to Strengths analyzes the larger picture of NER, looking at its broad comparative advantage in light of global trends. It also provides an in-depth discussion of key cross-cutting constraints, including connectivity and logistics, product standards and quality infrastructure. It also suggests the government create and sustain “Brand North East”, riding on the region’s strengths. 

The region can capitalize on rising demand for fresh fruits and vegetables, and for high-quality spices, especially those produced in an environmentally friendly and socially responsible manner.

Strengthening Cross-Border Value Chains examines in depth four value chains — fruits and vegetables, spices, bamboo and related products, and medical tourism. It provides an assessment as to how value chains in NER can be strengthened while also providing more and better jobs to women and the bottom 40 percent of the workforce. This volume also provides an assessment of how Bangladesh can benefit from the opportunities presented by the increasing connectivity and growth prospects of NER.

Increasing connectivity is a win-win for both NER and Bangladesh. A growing market for NER products in Bangladesh benefits the latter’s consumers, and foreign direct investment is good for NER  but also good for Bangladeshi firms that can gain access to inputs and land and learn in a culturally similar environment.

What do you think are the most promising avenues for sustainable development in India’s North Eastern Region?  We welcome your feedback.