The Indian government is intensifying negotiations to strengthen the northeastern region’s role as an export hub for markets in Bangladesh and the Association of Southeast Asian Nations (ASEAN). Hindustan Times reported that talks are underway to secure a more favorable free trade deal with the 10-nation ASEAN bloc.
According to officials, discussions revolve around renegotiating the ASEAN-India Trade in Goods Agreement (AITIGA), with the fourth round scheduled for 7-9 May in Kuala Lumpur. An improved agreement is anticipated to be finalized by 2025, potentially injecting significant economic momentum into the northeastern states.
The AITIGA was signed in August 2009 in Bangkok and came into force in January 2010. According to an official, this hastily signed Free Trade Agreement adversely impacted India, particularly because of its weak provisions for rules of origin, which led to massive dumping of Chinese goods via some ASEAN countries, leading to a massive trade deficit.
During the 2022-23 period, India’s trade deficit with ASEAN amounted to $43.6 billion, nearly equivalent to its total exports during the same timeframe, while imports surged to $87.58 billion, marking a 29% year-on-year increase. ASEAN’s member countries include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
The Northeast is also believed to have potential to become India’s manufacturing and export hub for the entire region, including Bangladesh and Myanmar. As per an official, the government is focused on developing the northeast, and a major impetus in this direction will be seen after the polls. Results of the general elections are set to be announced on 4 June.
Apart from AITIGA, it is said that a comprehensive strategy to develop the northeast is in the works. According to the officials, this strategy includes the identification of market requirements and policy support to produce goods and services for neighboring markets.
“The focus is on creating infrastructure such as special economic zones, warehouses, customs facilities, and highways to connect Bangladesh and ASEAN countries,” an official was quoted by HT.
According to the officials, highways and waterways linking major global markets with the northeast are a must to restore the old glory of these states.
“Before Partition in 1947, the northeast was well connected with the neighbouring region. Partition disrupted connectivity and left the region relatively inaccessible to most parts of the world,” the official was quoted.
The distance between Agartala and Kolkata, which was 350km through erstwhile East Bengal, increased to 1,645 km.
Japan has been playing a significant role in efforts to improve connectivity and infrastructure in the northeast. The Japanese envoy and India’s foreign secretary chair a unique body called the Act East Forum to drive these initiatives, and Japan has invested more than Rs1,600 crore in the northeastern states, barring Arunachal Pradesh.
A majority of Japanese investments has gone into improving roads and bridges, and Tokyo has supplemented these efforts with similar initiatives in Bangladesh.
Furthermore, Japan aims to establish a novel industrial value chain linking the Northeast with the Matarbari seaport in Cox’s Bazar district, Bangladesh. The Matarbari port, supported by loans totaling $1.2 billion from the Japan International Cooperation Agency (JICA), is slated for operationalization by 2027.
Northeast India’s strategic borders with Bangladesh, Myanmar, Bhutan, and Nepal, spanning over 1,880 km, 1,643 km, 516 km, and 99 km, respectively, offer ample prospects for mutual cooperation and development.
Emphasizing the transformative potential, a third official highlighted how industrializing the Northeast could position it as a pivotal gateway for trade with Asia-Pacific nations.
Covering 8% of India’s landmass and comprising states like Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura, the Northeast is home to approximately 3.8% of the nation’s population, as per the 2011 census. Despite this, its economic contribution remains modest, accounting for just 2.2% of India’s GDP in 2020-21, with Assam leading the charge, as indicated by the Economic Survey 2022-23.