The North-East finally closes its infrastructure ‘gap’ with Assam leading the way

Assam is the connecting state to the seven sisters in the Northeast.

The last decade was exceptional in the history of North-East India. The ‘historic gap’ in infrastructure, became history. The region is now matching the pace of the nation. The construction of the national gas grid is 70 percent complete in the North-East, the same as the country average.

Gas pipelines, roads and airports are not the only benchmarks of development. The region is witnessing record investments in the social sector, particularly in the areas of higher and professional education and healthcare. Start-up activities which were at the nascent stage before covid, have gained momentum.

And, if the Tata Group's plan to set up a Rs 40,000 crore semiconductor facility in Assam comes true, the investment climate in the region will undergo dramatic change over the next decade. To be set up at a closed paper mill premises near Guwahati, the proposal is awaiting final clearances from Delhi for the production-linked incentive (PLI).

Assam’s Paradigm Shift

Until 15 years ago, industrial activities in the region were state-dominated. Private activities were mostly limited to tea plantations. Tourist activities were restricted to Meghalaya and Kaziranga (Assam).

The region was disturbed and the Centre had no grand plans about it. Investments were made to create direct jobs without much attention to economics. A failed attempt to build a steel plant, several closed food processing plants which were built at great expense, and a series of tiny refineries and gas-based power plants – which have no case to survive in a modern world - are relics of that era.

The Manmohan Singh government initiated two major industrial projects. Coal-based Bongaigaon thermal power proved an economic liability to Assam. Gas-based ONGC Tripura Power (OTPC) was the only investment of value.

The paradigm now stands changed.

Guwahati is undergoing rapid capacity creation to fire the growth engine. A series of flyovers, several bridges on the Brahmaputra, ring road, modern airport etc will convert it from a small town of the past to a bustling metro city of the future.

For a state known for its slow pace (“lahe lahe,” as they say in Assamese), many projects are completed ahead of schedule. That’s a cultural shift.

The Narendra Modi government has a few misses like the failed mega food park in Assam. However, investments in industry became more meaningful than ever.

The large hydel projects of size coming up in Arunachal have both strategic and economic contents. They will minimise disaster in the valley if China decides to open the dams upstream of Brahmaputra.

North-East produces minimal crude oil. A huge pipeline infrastructure to import crude and product pipelines extending up to Bangladesh have created the opportunity for converting the region into a refining and petrochemicals hub. Capacities are expanded three times.

Corporate activities are shrinking and will shrink further in tea. Assam got reasonable private investments in FMCG, riding on the 2007 incentive scheme. However, the majority of such investments had viability concerns.

A top FMCG brand, that had set shop in Assam in the last decade, was importing raw materials through Mumbai. The processed product was sold in North India. The profit was coming from the state's largesse.

This is a repeat of the Uttarakhand experience where investments came and went with the incentives. Things might be slightly different in Guwahati due to recent improvements in logistics. However, an impact is unavoidable.

If Assam Prospers

The arrival of the semiconductor investment, therefore, was not only timely but a major boost to the confidence of the local technology start-ups which were feeling a little out of place until recently.

Assam is the connecting state to the seven sisters in the North-East. The immediate benefits will flow to Meghalaya which has social infrastructure to support industrialisation. The state has a history in cement and coal production.

On the flip side, Meghalaya has ruined the value potential in tourism by opening gates to volume tourists. Arunachal learnt from Meghalaya’s mistakes and is focussing on niche high-value tourism. Nagaland is also keen to follow this model. Both will gain if Assam prospers.

Sikkim is not part of the seven sisters but a part of the North-Eastern Council and is the most advanced in both social and economic indicators. With manufacturing contributing 59 percent of the gross state domestic product (GSDP), it is an example to many large states.

The transition took place in the last two decades. A host of hydroelectric projects by the state and the private sector gave them the first break, followed by a rush of investments in pharmaceuticals, FMCG etc. Tourism flourished as well.

Manipur and Mizoram may miss much of this newfound growth momentum. Mizoram has good social indicators but it lives in self-imposed isolation, which is not conducive to investments.

Manipur is a sad story. Entrepreneurship comes naturally to the majority Meitei community. Till last year Imphal was the second most prominent hub of private healthcare and startups, after Guwahati, in the North-East.

The Meitei-Kuki conflict that surfaced in May 2023 has set the clock back. The state has a long history of disturbances. Volatility in Myanmar and the open border have a link to the latest conflict.

Geopolitics will not give peace a chance in Myanmar in the immediate future. Things might head for a permanent solution if the Centre sticks to its target to fence the international border.

Pratim Ranjan Bose is an independent columnist, researcher, and consultant. His X handle is @pratimbose. Views are personal and do not represent the stand of this publication.