Invest in northeast: Handik to Indian Diaspora

source: iSikkim

Following are the excerpts of DONER (Development of North Eastern Region) minister B. K. Handik’s address in the plenary session on Investment Opportunities in the North Eastern Region at the recently concluded Pravasi Bharatiya Divas in New Delhi:


DONER Minister B. K. Handik in his address thanked the organisers for giving the eight northeastern states and DONER ministry the opportunity to showcase themselves. He expressed hope that this will create interest and interaction about the northeastern states of India among the Indian Diasporas. He said it to be an important opportunity to invest in the northeastern region.

The economy of the northeastern region was severely affected after the partition of the country. One of the main endeavours of the Central Government and the eight north eastern states would be to rapidly overcome this disconnect and open a new chapter in the economic growth of the region. Acceleration in economic growth has to come from all sectors. At present agriculture is the mainstay of the economies of the northeast. This sector accounts for close to 30% of the region’s Net State Product and is a major source of employment and livelihood for a large segment of the population. A great proportion of land is hilly and under dense forest cover. Land holdings are small resulting in lower agricultural productivity.

Economic growth is invariably associated with rapid structural changes in the economy. Almost eighty percent population of the north east depends on agriculture for livelihood. Transfer of labour from agriculture to manufacturing and tertiary activity is a necessity for living standards of the people and also for enhancing agricultural productivity. Presently there is not much large scale manufacturing activity in the north east. The industries are mainly mining and quarrying, food processing, spinning and weaving, pulp and paper, wine, building cigars and cigarettes, printing, bleaching and dying, wool spinning, wooden products, footwear, fertilizers and chemicals, insulated wires and cables and medicines.

The manufacturing activity is based on locally available resources and optimum investment size is not large except in case of cements and steel manufacturing units that have sprung up. Another problem of industrialization in the north eastern region is intra regional disparities. Assam is the industrial hub of the region. It has 86% of the factories of the region, which generates 88% of employment and 90% of the output of the region.

Next to Assam are Meghalaya and Tripura in terms of industrial activities. Responding to the need of industrialization of the north eastern region the Government of India introduced the North East Industry Policy in 1997 which offered a slew of fiscal incentives and subsidy to industries for a period of ten years. The policy was able to attract large scale investment in cement in Meghalya and Assam, ferro-alloys in Meghalaya and coal and coke in Assam.

As a process of continuous upgradation in North East Industrial and Investment Policy (NEIPP), 2007 has been announced for a period of another ten years offering even more attractive fiscal incentives and subsidies and now covering the service sector also. Given the level of most attractive incentives including 30% of capital investment subsidy on the plant and machinery, 3% interest subsidy on working capital, 100% income tax exemption and excise duty exemption on finished goods, the NEIPP 2007 has the potential of attracting large scale investment in industrial sectors. Some of the important service sectors like setting up of nursing homes, hotels, vocational training institutes, nursing and paramedical, civil aviation and related training.
State governments are taking the advantage of it by providing congenial atmosphere for attracting the desired investment. Meeting the aspirations of the people has been amongst the foremost tasks of the Central Government. A considerable amount of public investment is going in the region ever since the planning process was initiated in the country. The process got a fillip from 1998-99 onwards when it was mandated that the central ministries except those of technical nature should spend 10% of their budgetary resources in the northeastern states.

The provision for expenditure of Central Government on northeastern states has continuously increased from Rs. 3211 crore in 1998-99 to Rs. 16242 crore in 2009-10. Given the complexity of the task, augmenting investment to accelerate growth in the region is only a part of the story. A successful transformation of investments in the developments outcomes requires a variety of initiatives. The sectors that have huge score in the region are infrastructure, food processing, IT, tourism.

When I joined the ministry in 2009 in charge of DONER and Ministry of mines, then with coordination of both the ministries we organised a joint conference in Assam. After that we hatched some regions. We found Silica sands which has the possibility of supporting glass industry in Assam. Again in Assam, there are traces of rare earth metals in the district called Karbi Anglong. It is rare opportunity for any country to have such minerals. In Nagaland they have already taken official initiatives so that they can go for coal mining in a big way. Even in Meghalya they have decided to go for mining in Uranium. These are good news for the region and it is right time for Indian Diaspora to come forward to carry this region ahead at the initiative of the ministry of Overseas Indian Affairs.

There is an old saying, even the journey of one thousand miles starts but with one step. I am happy to say taken quite a few steps already in the form of infrastructure development. Due to policy framework and proactive efforts on diplomatic front, the region is now poised to reap economic benefits of these initiatives. This process can be further taken ahead with the cooperation of Indian Diaspora which is already involved in India’s developmental efforts in a significant manner. I am happy that there are honourable chief ministers and other senior officers from the north eastern states who would be able to provide important insight on the subject. An exhibition has also been put up in this regard. You are also welcome to interact with the states or my ministry on any issue that may arrive. This is the keynote address, I was asked to deliver. I believe this would go well with the Indian Diaspora and they will come forward to carry this region farther so that this region no longer remains the backward region of this country. Thank You very much