The North East Region (NER) that consists of eight states – Assam, Arunachal Pradesh, Manipur, Sikkim, Meghalaya, Nagaland, Mizoram and Tripura – has long been talked about as a potential industrial hub for SMEs! Rightly so as the Central Government’s thrust, since last six-seven years in collaboration with State Governments, on establishing industries in NER is believed to be in the right direction, giving entrepreneurial support in order to build a complete industrial ecosystem. The concerned authorities have also taken it on priority to develop infrastructure facilities such as roads, logistics, power, water supply, land and cross border connectivity here, facilitating inclusive growth of industries in the NER through the developmental dialogue.
There are supporting factors that justify all the hype about setting up industries in NER and prove to be a potential game changer for NER’s manufacturing sector. The North East states are economically important primarily owing to two fronts – 1) the strategic location of the region that connects India to the South-East Asian markets; 2) the presence of potent input market catalysts such as social capital (diversity, cultural richness), physical (energy supply hubs), human (inexpensive, skilled labour) and natural (minerals, forests). In the last two decades, economic growth in the NER has been decent with an annual growth rate in excess of 8 per cent and this growth signals that the region is also getting benefits from the boom the national economy is witnessing. So, why not capitalise on it?
NER is a prospective industrial hub for all positive reasons…
With all these above-mentioned factors working strongly in favour of NER, value chains across NER may eventually go up as the supporting supply chains and infrastructure are rapidly moving in place. Adding to this is the extensively developing road and rail transportation; relaxed minimum wages; cheap electricity rates; and cross border trade commerce opportunities that are strengthening NER so that industrial base can see maturity.
Minimum Wages – For manufacturing industry, the most concerning challenge today is high labour cost but NER does offer inexpensive labour costs that is touted as one of the most attractive factors for businesses in NER. Minimum wages, set by the state governments, range from Rs. 5,280 (for unskilled workers) in Nagaland to Rs. 13,800 (for skilled workers) in Mizoram, while average minimum wage for semi-skilled workers is nearly Rs. 8,497 in entire NER.
Electricity Rates – NER does have one of the cheapest rates in India for industrial electricity as some of the states such as Meghalaya are making their own electricity through well-established Hydro Power Plants. This is the reason Meghalaya offers power tariff as low as Rs. 4.50 per unit in industrial consumption and is way ahead of other states such as TN, AP, WB, MP, Rajasthan, Karnataka, UP, Delhi, Punjab in terms of industry-friendly electricity rates. The average industrial electricity rates in NER stand at nearly Rs. 4.70 per unit.
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Skill Development Initiatives of the Government –The Skill India programmes have taken significant strides in the North Eastern states. Under Pradhan Mantri Kaushal Vikas Yojana (PMKVY), free skill training and certification across roles is provided to improve employability. In NER, 3 lakh youths have been trained since 2016, of which 1.95 lakh have been certified. To improve the livelihood opportunities of more than 80 thousand traditional arts and handicrafts, artisans have had their skills certified under the PMKVY in the region. The Ministry has allocated 103 Pradhan Mantri Kaushal Kendra (PMKKs) multi-skill institutes for better employability of NER youths who are in demand in many industries.
Further, the Ministry of Skill Development and Entrepreneurship (MSDE) has already introduced National Skill Training Institute (NSTI) for skilling women of Tripura in non-traditional roles and increasing gender sensitivity in the workplace. Under a Skill India Special Project to support the Bru Tribe Women, almost 250 women have been trained under PMKVY 2, and employed. Jan Shikshan Sansthans under MSDE have been established and re-operated through NGOs, providing vocational skills.
MSDE has also undertaken several initiatives to promote entrepreneurship pan-India including the NER which, the Ministry believes, is the unexplored potential in the region. The Ministry has ensured that there is a single regulator for training ecosystem (for both short-term and long-term training) to streamline all skill trainings to one legal entity. MSDE has further established the National Council for Vocational Education and Training (NCVET) which was approved by the Cabinet in October 2018. NCVET is in the process of being set up as an overarching skills regulator by merging the existing skill regulatory bodies- National Skill Development Agency (NSDA) and National Council for Vocational Training (NCVT).
Currently, there are 73 ITIs in NER with seating capacity of 17,000. The State Governments in NER and Central Government are jointly putting efforts to train the trainers at these facilities. MSDE has also set up two National Skill Training Institutes (NSTI) in the region – one each in Tripura and Meghalaya. Apart from this, the Government has also released Rs. 60 lakh towards upgrading of training equipment particularly in Manipur.
Domestic and International Trade Ties through Cross Border Commerce – NER shares borders not just domestically but with countries such as Bangladesh, Bhutan, China, Myanmar and Nepal that makes it conducive to international trade. Several initiatives have been introduced by the Central Government, in an attempt to re-align the NER with the mainstream political and economic goals of the country. Most notable of these is the Act East Policy (AEP). Under this policy, NER can set up part manufacturing facility in different industries and export the same in neighbouring countries that do not have that sort of expertise in their manufacturing divisions.
Transportation –Compared to what the situation of interstate transportation was a decade back, NER has seen notable changes as intercountry bus, air and rail services from North East India are in better shape today. It is the airlines that connect NER with the rest of India; Guwahati is now directly connected by air with most of major Indian cities and Dhaka, Paro and Bangkok for passenger, while Hong Kong for freight. However, NER’s other airports are behind of Guwahati in connecting with abroad!
Railway connectivity in NER has progressed well too. Capitals of North East states are getting connected by rail with the rest of India. Agartala and Silchar are now having broad-gauge railway lines and are connected with other parts of India, while train services have already been started between Dharmanagar, Agartala and Sabroom in Tripura. The railway link to Sabroom is vital for the development of the state of Tripura, and linking it with Chittagong Port will open new vistas and business opportunities for the entire NER. The railway line has also reached Imphal now and it is now to be extended to Moreh and then to Tamu and Kalay in Myanmar.
Road transport, in the last five years, has been scaled up a lot as several road connectivity projects have been taken up in NER under the Bharatmala and about 5300 km long road is being developed for border road and international corridors. By 2023, almost 80 to 90 per cent of the road connectivity in the NER under Bharatmala Pariyojana would be completed. This is expected to boost logistics services within the region.
Connectivity through waterways has also witnessed some major changes in recent years. Cargo transportation through National Waterway (NW) 2 has been rising. Export to Bangladesh using IWT has also gone up in recent years. Dhubri (in Assam) is now well connected with Narayanganj (in Bangladesh) through IWT and there has been regular sailing of cargo vessels.
Investment Subsidies– Under the North East Industrial Development Scheme (NEIDS), Central Capital Investment Incentive for Access to Credit 30 per cent of the investment in plant & machinery with an upper limit of Rs.5 crore on the incentive amount per unit, Central Interest Incentive (Cll) 3 per cent on working capital credit advanced by eligible banks/financial institutions for first five years from the date of commencement of commercial production by the unit will be provided.
The policy also stipulates 20 per cent of the cost of transportation including the subsidy currently provided by Railways/Railway PSU for movement of finished goods by rail. Additionally, 20 per cent of cost of transportation for finished goods, for movement through Inland Waterways Authority of India is borne by the Government, while 33 per cent of cost of transportation of air freight on perishable goods from the airport nearest to place of production to any airport within the country is also taken care of.
Logistics Parks – The concept of Logistics Park is new for NER and it is gradually picking pace. It requires logistics parks all across the major trading points to generate huge business opportunities. The Asian Development Bank (ADB) is setting up such facilities in Assam, while there are news that Indian and global logistics operators shall be invited to develop specialised logistics centres in NER.
