How Assam’s ability to attract investments has made it a lodestar

There is little doubt that Assam and the Centre have played their cards well in promoting the state as an investment destination.

The recently concluded second edition of ‘Advantage Assam’ business summit mopped up investment proposals worth Rs 4.91 lakh crore, second to Odisha’s Rs 16 lakh crore in the entire East and Northeast. Proposals do not mean money. Neighbouring West Bengal throws out mind-blowing numbers after each edition of Bengal Global Business Summit (the last one fetched Rs 4.4 lakh crore) without any change in ground realities.

Japan’s taking a long-term view

Having said that, the huge interest of the national and international community, in Assam is unmistakable. Japan, for example, has been taking keen interest in the state and the region, ever since the Narendra Modi government went on an overdrive to improve the logistics scenario in the Northeast as part of the Act East agenda

In 2019, Japanese Prime Minister Shinzo Abe planned a visit to Guwahati along with a galaxy of officials and industrialists. The summit was cancelled at the last moment due to violent protests against the Citizenship Amendment Bill.

This writer was eyewitness to the trouble faced by stranded foreign delegates who had arrived in the city ahead of the Prime Ministerial visit. Thankfully, the episode did not impact the long-term interests of Tokyo.

Japan is not alone. Much of the consular activity in Kolkata, the only metro city in the East, is dedicated to track developments in Assam and the rest of the Northeast.

While strategic reasons are on top of the international agenda. There is little doubt that Assam and the Centre have played their cards well in promoting the state as an investment destination.

Assam government has played a key role

The role of the Himanta Biswa Sarma government needs special mention as it had catapulted the state into the real big league by attracting semiconductor investment from Tata group.

In February 2024, the Centre approved three production-linked incentive proposals in semiconductor. Two went to Gujarat. One led by Tata was approved to Assam.

That was really big because the Centre has been approving PLI projects in technology space with lot of care. Delhi cannot take chances of the failure of these projects and are directing them to locations which can offer due ecosystem.

While political debates may continue about favouritism to BJP ruled states, a look at the PLI-linked technology investment map will tell that non-BJP Karnataka and Tamil Nadu, which have proven track record in attracting investment, are getting a fair share of projects.

FY16 was a pivotal year

Assam was a complete outlier to this design. The state was in the grip of militancy till about 15 years ago. Until a decade ago, rice mills, steel re-rolling mills, bakeries etc passed as private investment.

Tea and oil had long been icons of economic activity of the state. Organised plantation thrived on colonial principles of labour-cost arbitrage till small farmers threw intense price competition. The sector is now in distress.

The crude oil production is slow low that nearly half of the minuscule seven million tonne refining capacity remained unutilised.

Agriculture is not of factory grade and is scattered; making the state unsuitable for large scale processing. Public money used in creating large facilities have either been wasted or failed to achieve their potential.

That was Assam only a few years ago. Things started changing around 2015-16. As Modi went with his infrastructure boost, FMCG companies (Emami, Marico, Patanjali etc) made a dash for Assam.

The initial attraction was limited to reaping the benefits of North-East Industrial and Investment Promotion Policy (NEIPP), 2007. But soon Assam started attracting investments, in small parcels, in areas like pharmaceuticals, IT outside the NEIPP.

Things have started moving on fast lane since Himanta took over reigns from BJP’s Sarbananda Sonowal in 2021.

The importance of Himanta Biswa Sarma

Popularly referred as ‘Mama,’ Himanta’s advantage lies in his ability to manage both the political and administrative side of the government at equal ease.

He has been BJP’s pointsman in the region since joining the party in 2015. Over the years, he elevated his position as a top national leader of the party.

Assam produced many senior leaders for Congress. However, names like Hiteswar Saikia or Tarun Gogoi barely had a calling outside Northeast. P A Sangma of Meghalaya did create a buzz as speaker of Lok Sabha.

Himanta is probably the first leader from region who has a brand recall across the country and is playing a key role in shaping his party’s fortune far away from the Northeast.

The phenomenon is largely linked to Northeast’s integration to the rest of the country. Until a decade ago, the region was infrastructure deficient but no more. From Tripura’s Agartala to Assam’s Karimganj is now a six-hour journey by road, down from 17 hours in 2017.

Take any measure - air connectivity, availability of cooking gas, electricity, gas pipeline, healthcare facilities, number of medical colleges – Northeast has undergone a dramatic makeover.

The story is not over yet. Huge investments in pipeline infrastructure converted the region into a petroleum product exporter. Gone are the days of mini-micro refineries and idling capacities; public sector refiners are now doubling capacity.

The 1600 km gas pipeline network will not only distribute gas. It will also be used for evacuation of gas creating new opportunities in the exploration and production segment.

Real test will be to attract sustained private investment

What remains to be done is to convert this advantage in attracting private investment. Assam is not cut out for large scale manufacturing. Services is its best bet. Indirectly though Tata semiconductor gave Assam that break.

Over the last one year, the state has become a popular hunting ground for IT industry. True, only a few have set up shop. But that is how private investments move till they are convinced of the ability of the local economy.

A mid-sized Kolkata-based IT company recently moved its back office to Guwahati. If the project is successful, they will expand operations in Assam. The job at hand is to prevent 2019 like political volatility that can unnerve investors.

It took one Singur to destroy West Bengal’s hope. Assam has crossed a great distance from its ‘Lahe Lahe’ (slowly) days. It’s success may add a new chapter in the history of industrial development. It cannot afford to fail.