Northeast India is poised to tap economic potential

India’s remote northeast region has been both blessed and cursed by its geography. The region is rich in natural resources but is landlocked and surrounded by China, Myanmar, Bangladesh and Bhutan, leaving it impoverished.

The eight-state region may finally get a chance to start living up to its economic potential with several projects to enhance connections with Southeast Asia and to increase outlets for such commodities as organic foods, orchids, tea, coal and oil.

Now, the only way to move major quantities of goods between northeast India and Southeast Asia is through Bangladesh.

But authorities in Myanmar and India are nearing final approval of a $100-million river project giving northeast India direct access to the Indian Ocean through Myanmar, said Abhijit Barooah, chairman of the northeastern chapter of the Confederation of Indian Industry, India’s premier business association.

The project envisages facilitating movement of cargo from India’s Mizoram state to Myanmar’s port at Sittwe, via the Kaladan River.

In addition, talks have begun between companies in northeast India and Thailand after a trade-promotion conference in Bangkok in October, said Lemli Loyi, assistant general manager at the state-run North Eastern Development Finance Corp. Loyi expressed hope that the talks would result in increased business and possible joint ventures.

India first enunciated a “look east” policy, an economic and strategic orientation toward Southeast Asia, in 1992. It had its genesis at the end of the Cold War, after the collapse of the Soviet Union. Having lost the Soviet economic and political support on which it had relied, the Indian government embarked on a program of free-market restructuring at home and sought new markets and economic partners abroad.

Officials envisaged that the eight northeast states -- Assam, Meghalaya, Manipur, Nagaland, Sikkim, Arunachal Pradesh, Tripura and Mizoram -- would emerge as a trading hub for two dynamic regions connected by a network of highways, railways, pipelines and transmission lines. The region is home to about 40 million people.

But progress has been slow. The region’s isolation dates to the 1800s.

“Nineteenth-century British colonial decisions to draw lines between the hills and the plains, to put barriers on trade between Bhutan and Assam, and to treat Burma as a buffer against French Indochina and China severed the region from its traditional trade routes -- the southern trails of the Silk Road,” said Sanjib Baruah, a professor of political science at Bard College in New York and an expert on northeast India.

The British built railways and roads mostly to take tea, coal, oil and other resources out of Assam and into the rest of India and also to Europe.

The problems increased with the partitioning of India and Pakistan in 1947. Bangladesh broke away from Pakistan in the 1970s.

Barooah said trade would be boosted by an expected move by the Indian and Myanmar governments to expand the list of mostly agricultural commodities allowed to be traded by land between northeast India and Myanmar, from 27 to 42 items.

“The northeast is the closest land mass connecting the dynamic economies of south and Southeast Asia,” said Pradyut Bordoloi, Assam’s minister for power and industries. “Besides deep-rooted cultural linkages, we can reap multidimensional benefits in this era of regional economic cooperation.”

Bordoloi is closely associated with a campaign to reopen the World War II-era Stillwell Road, connecting Assam’s town of Ledo to southwest China.

“If reopened, this would be the shortest surface route to Yunnan province of China and other Southeast Asian countries hooking onto the trans-Asian highways,” he said.

The road served as the supply line into China during Japan’s wartime occupation, but it was shut after India’s independence from Britain in 1947.

Bordoloi said his campaign to reopen the road, initiated after he became a state legislator in 1998, scored a victory when India upgraded the road to a full-fledged national highway, developing it up to the Indo-Myanmar border.

Officials say infrastructure development, power, bamboo-based industries, orchids and organic foods are prospective areas of cooperation with Southeast Asian countries such as Thailand.

But significant hurdles remain, including concerns that booming trade relations may fuel rises in insurgency, narco-terrorism and AIDS, all of which plague the northeast. Security in the region is tight, with the army out in force to combat armed groups battling for greater autonomy or independence from India.

“The official restrictions that prevail in northeast India -- in terms of travel, land and labor markets -- are hardly conducive to intensive cross-border economic relations,” said Baruah, the political science professor.

“Both the reality of insurgencies in the region and the security anxiety of the government of India . . . are major obstacles to dynamic cross-border economic ties,” he added, calling current efforts hardly more than “a bare beginning.”

Also, Baruah said, it was difficult to imagine a big increase in trade given the political situation in military-led Myanmar.

India’s relations with China, a country it has long regarded with distrust since a 1962 border war, would also have to become much more relaxed, Baruah said.