Dialogue July-September 2007, Volume 9 No. 1
Preparing North-East for Look East Policy
Ever since liberalization of the Indian economy in 1990 a new orientation is sought to be given to India’s foreign policy and trade by a thrust on south Asian and south east Asian countries. Prime Minister Manmohan Singh described India’s "Look East" policy as "a strategic shift in our perspective" and further clarified that "the age-old India-Asean linkages have been given a renewed thrust with the impressive growth of connectivity and the ever increasing flows of tourism between India and Asean." In fact Asean (Association of South East Nations) has reached 40 years of its existence in 2007. Recalling the events Singh further said that "in the present phase of our ‘Look East’ we in India seek to deepen our economic integration by entering into free trade or comprehensive economic partnership agreements, both with Asean as a whole and with individual countries of the region,"1
The very first agreement in this field was the Indo-Myanmar Trade Agreement signed on January 31, 1994. The agreement provided for "establishment of trade on the basis of equality and mutual benefit." The idea put in place a "signaling device to monitor the movement of commodities and people." Probably another objective was to provide "an insurance against the perceived threat of Chinese dominance of the region.2 A Memorandum of Understanding (MOU) was also signed between the Governments of India (GOI) and Myanmar on the same day. These two agreements were followed up by a high level talk on June 10, 1994.
Media comments on these events at that time were favourable to GOI. For example, Sapra (a Delhi based NGO) said that "improvement in relations with ASEAN as well as key East Asian countries like China and Japan would only heighten regional economic bonds. India’s increasing integration with this region will only help ensure that these bonds do not snap at any time in the foreseeable future".3 The MOU is concerned with co-operation between civilian border authorities of the countries. The minutes of the talk related to banking and trading arrangements, immigration and customs inspection and timing of border trade. Indo-Myanmar trade was formally launched on April 12, 1995 by the then Union Commerce Minister P. Chidambaram and his Myanmar counterpart Lt.Gen Tun Kyi.
It is appropriate that the Look East policy first touched Myanmar. Myanmar common border of 1643 kms with four of India’s Eastern states, namely, Arunachal Pradesh, Nagaland, Manipur and Mizoram. For trade with China and the south East Asian countries by the land route all movement has to be through Myanmar. Its strategic geographical location cannot be ignored. That is why India is proposing to build a trans-Asian railway network through Myanmar to Singapore. The Asian road highway is already under construction. The ultimate idea is to link up the Indian ocean with the south China sea.
Writing about India’s foreign policy in the Asian context the former Indian Foreign Secretary late J.N. Dixit had suggested that our trade relations with Myanmar should be normalized irrespective of the government that may be in power there because that country was geo-strategically important to India. Such close cooperation with Myanmar was also necessary in order that India may curb smuggling, border crimes, drug movement and insurgency. Dixit, however, never envisaged the "Look East" policy although he had devoted three chapters of his book to India’s relationship with the countries of Asia.4
Sixty five years ago the then Supreme Commander of the Allied Forces, Mountbatten, also recognized the importance of NE. It was his South East Asia Command which built the famous Ledo Road to Kunming in China Stillwell Road for supervising the two oil pipe lines respectively from Kolkata and Chittagong via Tinsukia and also for troop movements. Its construction was overseen by Mountbatten’s quarrelsome Deputy, Stilwell, but a magnanimous Mountbatten named the road after Stilwell.5
In the second Indo-Asean summit in 2003 India signed the treaty of Amity and Co-operation in South-East Asia. A separate Declaration provided for combating international terrorism as also for comprehensive economic cooperation with a view to step up the current volume of trade. Again in order to achieve closer trade relations it is expected that India’s peak tariff rates would be reviewed to make these at par with the rates in the Asean countries for which a Free Trade Agreement was also signed.
According to Sanjib Baruah, foremost scholar on the Look East Policy, "Northeast India’s isolation from its neighborhood has much older roots: that which came about as a result of the advent of western dominance over sea routes and over global trade and more particularly the British conquest of the region and the decisions to draw lines between the hills and plains, to put barriers of trade between Bhutan and Assam and to treat Myanmar as a strategic frontier - British India’s buffer against French Indochina and China. While the British colonial rulers built a major new transportation infrastructure, aimed primarily at taking tea and other resources out of Assam, the disruption of old trade routes remained colonialism’s most enduring negative legacy."6
According to Baruah "Northeast India was on the southern trails of the Silk Road." If that was so this region had connectivity in the ancient times with the world outside which got snapped during British times. In this connection Baruah alludes to Bhutan. That country realized the importance of connectivity with south-east Asia. The Bhutan King emphasised this when he made the following statement: "No other region in the world needs harmonious and cooperative relations among its states more than South Asia."7
The legal and the formal arrangements for trade through NE to southeast Asia is now more or less complete. But is NE ready for it? This region is not yet economically as developed as the rest of India, Moreover, it is land-locked. After partition of India in 1947 NE lost its natural trade routes through what is now Bangladesh. Its land connectivity with the rest of India remained limited to the 22 kms "Chicken’s neck" in northern West Bengal.
As far as trade itself is concerned many countries and regions in the world have become prosperous through trade. In fact countries like Taiwan, South Korea, Hong Kong, Singapore and Malayasia have achieved their present status and level of development through industrialisation and trade. But what has NE to offer to, say, China in exchange for the plethora of goods which that country is already exporting to this region? Industrial products are very limited. Agricultural products will need proper processing and packaging before the same can be exported. The service sector is not doing badly. But the quality is low. Tourism has not been so attractive because facilities are not upto the mark and also because of media’s projection of our security environment in very bad light.8 An extremely concentrated endeavour will be required to achieve economic development of NE and its principal state of Assam before NE can be ready for participation in the Look East policy.
Let us examine the situation. Will opening a new trade route or reviving the ancient land trade route through NE lead to economic development of this area? There is nothing automatic about it. Before meaningful trade activities can be undertaken our agriculture has to improve both in terms of production and in terms of productivity. Processing industries have to be set up to manufacture quality goods which can be offered in international markets at acceptable prices. The entire infrastructure of roads, railways, communication and air transport will have to be completely revamped. Similarly hotels, restaurants and resorts will have to be built for sophisticated tourists. If that cannot be achieved Look East policy will not benefit NE. In that case the Look East policy will only provide a bridge between the rest of India and south east Asia of which NE will forever remain an "underbelly". These types of results probably were not envisaged when the policy was devised. Economic development of NE is, therefore, an important requirement.
It is not proposed to go into the details of the steps needed to achieve this objective. But an attempt is being made to identify, to the extent possible, the exports which are within the range of possibility. Agriculture is the mainstay of majority of people in all the states of NE. But except for Tripura and Manipur agriculture is not doing well in the other states. In Assam there is a process of deceleration during the past few years when production, productivity and land use have all declined. However, the potentialities are great in agriculture because of good climate, plenty of water except in certain patches, low cost of land and availability of cheap labour.
Export possibilities are quite high in plantation crops. Tea, for example, has been exported ever since the first batch of Assam tea was auctioned at London in 1834. Even now Assam produces more than half of India’s and 15 percent of the world’s tea. Its export has declined somewhat due to increasing cost ‘and lack of demand for high quality tea which Assam produces. Kenia and Sri Lanka produce tea all around the year against Assam’s nine month season. Hence the high cost and limited per hectare production. But proper branding and educating the Asian middle classes about the value of high liquoring properly blended and carefully produced Assam tea should be able to increase tea export to these presently non-traditional markets.9 Again green tea market is quite extensive in Asia. Assam can convert some of its area to green tea.
Fresh fruits and vegetables of NE are of good quality. Once cold storage and cold chain are provided these can be exported in plenty Cold chain involves pre-cooling at farm yard, deep freezing in heavy vehicles during transportation and retail sale from refrigerators. Preservation and packaging also are important, NE’s major fruit products include pineapples, pears, bananas, plantains, oranges and now even apples. Vegetables include chillies, ginger, pumpkins, gourds, cucumber, tomatoes, egg plants and onions.10 According to the Export Import Bank of India’s assessment "Asia region accounted for nearly 15 percent of share in the global fruits and vegetable imports. Major importers include Japan, Hong Kong, Singapore, India, Saudi Arabia and China. In terms of exports, major Asian players include China, Turkey, India and Thailand"11
NE is till now outside the traditional rubber-growing area. However its climate is very favourable for rubber. A good beginning has been made in Assam with 10,500 hectares under 400 varieties of rubber and in Tripura with 23,500 hectares under high yielding varieties. In fact, Tripura has been declared as the ‘second rubber capital of India" (next to Kerala) by the Indian Rubber Board, Again Assam produces 40 percent of India’s rubber honey. It appears that 500 tonnes of honey can be produced from an average rubber plantation. Its export possibilities need to be explored.12 India is the third highest rubber producing country in the world and has the highest rate of rubber productivity.13
NE is believed to be very rich in medicinal plants. Arunachal, NE’s largest state in area, is reported to have more than 500 species of medicinal plants. In Manipur the investment requirement on medicinal plants has been estimated at Rs.100 to Rs. 132 crores. In Nagaland ginseng is available among medicinal plants. Here the investment requirement is estimated at Rs. 80 to 104 crores. The plants include agar, tejpatta, dalchini, mint etc. Similarly in Mizoram the investment requirement on medicinal plants will be Rs. 100 to Rs. 132 crores. In Tripura it will be Rs 55 to Rs 71 crores. Assam’s vast expanse of dense forest reserves have "medicinal herbs with an investment potential of Rs 173 crores to Rs. 195 crores which include cultivation, drying and storage, herbal formulation, homeopathy, plants and spices processing etc."14 Identifications and preliminary estimations have been already done. What is needed is to bring up the units in coordination and collaboration with India’s export oriented pharmaceutical industry which has registered high growth during the past few decades.
The Asian market has already shown its liking for some of the industrial products of NE. Products manufactured from plantation crops such as jute, mesta, and ramie have proved their popularity in the Asian market. Assam is one of the leading producers of good quality jute in the world and it "enjoys a competitive advantage in the availability of superior fibre and inexpensive, semi skilled labour..........There is tremen-dous scope for production and export of jute commodities and value added items and the industry has been identified as a thrust area."15
In the case of cane and bamboo products also NE has vast potential. Considerable work has been done on this industry and the demand has been evidenced in various national and international exhibitions and expositions. Another area with great possibilities is handloom and handicraft. Assam’s silk and particularly muga can earn megabucks abroad.16
It is the vision and concentrated efforts in various thrust
areas after micro studies and appropriate project formulation which can bring NE
to a standard in which it will be able to stand the challenge of the Look East
policy and will also be able to fully participate in the new milieu. The macro
studies have been already done. Considerable work of identification of
agriculture, horticulture, floriculture and industrial products have also been
carried out. But the real work has to start in the field. Only then NE can hope
to be a part of the bridge connecting India and south and southeast Asia.
1. The Economic Times, Issue dated February 12, 2007.
2. Amar Yumnam. "Indo Myanmar trade through Moreh: Status and Assessment."Seminar paper in the National Seminar on Promotion of Border Trade between India’s North East and Myanmar: Problems and Prospects. Imphal, November 8 and 9, 2004. The present writer attended this seminar and chaired a session in which trade through Stilweil Road was discussed.
3. "India: Looking East", Editorial in Sapra India Bulletin. November, 2006 Issue. New Delhi.
4. J, N. Dixit. "My South Block Years: Memories of a Foreign Secretary," UBS Publishers. New Delhi. 1997.
5. The Earl Mountbatten of Burma. "Report to the Combined Chiefs of Staff by the Supreme Allied Commander, South East Asia. 1943-45". The English Book Store. New Delhi. 1960. Afso see H. N. Das. "India- China Trade through the Stilwell Road: Dialogue. Vol. 6 No.1. July- September, 2004. Astha Bharatt. Delhi. 2004.
6. Sanjib Baruah. "Between South and South East Asia : North East India and the Look East Policy." Omeo Kumar Das Institute of Sociaf Change and Development. Guwahati.2004.
7. Parmanand, "The Politics of Bhutan. Retrospect and Prospect." Pragati Publications. Delhi 1992, The Bhutan King expressed similar sentiments when the present writer had an audience with the King while leading an official delegation to Thimphu in April, 1993. Baruah refers to a paper by Francoise Pammaret (maiden name) on Bhutan, Cooch Bihar and Assam. But Francoise Pammaret- Imaeda has described Bhutan in glowing terms in her jointly authored (with Yoshiro Imaeda) coffee table book, "Bhutan: A Kingdom of the Eastern Himalayas." Times Books International. New Delhi. 1989.
8. H. N. Das, "Economic Consequences of Insurgency in Assam." The Indian Police Journal. Vol. L. No. 1. January- March, 2003, New Delhi.
9. As a member of the Indian Tea Board delegation the present writer witnessed the launching of the Assam logo in UK in March, 1990 when Stachi and Stachi, then the world’s biggest advertisement firm, targeted the sophisticated south of London Thamas Valley housewives with the message of higher price for better quality Assam tea. The German and the Iranian markets prefer Assam’s highest priced second flush tea produced in June-July and they often airlift their consignments to retain the freshness.
10. Ginger is grown in plenty in Mizoram and the hill districts of Assam. Special attention is now being paid to its marketing by government. Assam’s chillies have received high accolades in the international market. See (i) National Geographic. May, 2007."Bih/Bhut Jalokia." (ii) Time.Special Summer Issue, June 25-July 2, 2007. "Global warming. How thechili spread from its South American home and spiced up world cuisine."
11. Export Import Bank of India, "Fresh Fruits, Vegetables, and DairyProducts: India’s Potential to Export to other Asian Countries." Quest Publications. Mumbai.2005.
12. North Eastern Development Finance Corporation Limited (NEDFI) "Resources and Investment Potential in North Eastern Region." Guwahati,
13. Export -Import Bank of India. "Export Potential of Indian Plantation Sectors: Prospect and Challenge." Sita Publications. Mumbai, 2004.
14. NEDFI. Op cit.
15. NEDFI. Op. cit.
Institute of Entrepreneurship, Guwahati "Prospects of Border Trade with Myanmar
and Bangladesh". Pre- investment Feasibility Study done for NEDFI.
Similar studies are required for the other countries of south and southeast Asia.
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