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Gateway to the Indo-Pacific and India’s Act East Vision
Harnessing India’s Northeast for Utilising Act East Policy
Context: Once considered a remote frontier, India’s Northeastern Region (NER) is now at the heart of New Delhi’s geoeconomic aspirations, positioned as a strategic bridge between South and Southeast Asia.
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- Central to this transformation is the Act East Policy, which envisions the NER not just as a geographic periphery, but as a vibrant conduit connecting India’s hinterland with ASEAN economies via multimodal infrastructure and trade networks.
Geoeconomic Context
- China’s assertive presence—marked by expansive infrastructure and trade investments in India’s neighbourhood, particularly in Myanmar and Bangladesh—poses both opportunities and challenges for India.
- As Beijing expands its influence through projects like Myanmar’s Kyaukpyu Port and Bangladesh’s deep-sea ports and transit corridors, India must respond with strategic foresight to safeguard its own connectivity and trade interests in the region.
- For the landlocked Northeast, the key to unlocking its economic potential lies in connectivity with the Bay of Bengal and, by extension, the broader Indo-Pacific.
- Infrastructure initiatives like the Kaladan Multimodal Transit Transport Project (KMTTP) are crucial in reducing reliance on the narrow Siliguri Corridor and opening alternative routes to the sea.
Challenges and the China Factor
- Reshaping Trade Flows: China’s growing footprint in Myanmar and Bangladesh reshapes regional trade flows, directly influencing Northeast India’s prospects.
- While improved regional connectivity may expand market access for local industries such as Assam’s tea and Manipur’s handloom sectors, the downside is significant.
- Informal trade routes have facilitated an influx of inexpensive Chinese goods, undermining local manufacturing and leaving the region heavily reliant on imported consumer products.
- Weakening Competitiveness of Indian Exports: Moreover, China’s assertive economic diplomacy continues to weaken the competitiveness of Indian exports from the Northeast, challenging New Delhi to ensure that its connectivity projects foster domestic industrial development rather than merely serving as transit routes for foreign goods.
Multi-Pronged Strategy for Regional Integration
To truly integrate the NER into the Indo-Pacific framework and counterbalance Chinese influence, India must pursue a comprehensive strategy encompassing five core pillars:
- Accelerating Connectivity and Trade Facilitation: Boosting physical infrastructure remains the foremost priority.
- Critical projects like the Kaladan corridor and the India-Myanmar-Thailand Trilateral Highway need expedited implementation by addressing financing and security concerns.
- Diplomatic engagement with Myanmar must prioritise treating these routes as shared economic lifelines.
- Additionally, expanding land customs stations and integrated checkpoints along the Indo-Myanmar and Indo-Bangladesh borders will enhance trade flows.
- Establishing ASEAN consulates in the region and simplifying non-tariff regulations can further ease cross-border commerce for Northeast-based entrepreneurs.
- Developing Competitive Industrial Clusters: The region’s unique strengths—agro-processing, handicrafts, textiles, pharmaceuticals, and bamboo-based industries—must be leveraged to build export-oriented industrial clusters.
- Policymakers should operationalise Special Economic Zones (SEZs) and industrial parks, offering tax incentives, “plug-and-play” infrastructure, and streamlined approvals to attract investment.
- Access to credit must also improve. Expanding schemes like the North East Entrepreneurship Development Program (NEEDP) will empower MSMEs with affordable loans and capacity-building support.
- Enhancing Human Capital and Soft Infrastructure: Human connectivity is as crucial as physical infrastructure.
- Upskilling local populations in logistics, foreign languages, and manufacturing is vital to aligning with global value chains.
- Educational and cultural exchanges with ASEAN countries could position the region as India’s cultural and economic interface with Southeast Asia.
- Tourism holds untapped potential. Easing permit restrictions, curating themed tourist circuits (such as Buddhist trails and eco-tourism), and improving air connectivity can boost foreign interest and economic activity.
- Enhancing digital infrastructure will also help integrate the region into national e-governance and digital trade platforms.
- Leveraging International Partnerships: Strategic partnerships, particularly with Japan and the United States, offer opportunities for sustainable growth.
- Japan has played a significant role through Official Development Assistance (ODA) for roads, water supply, and other critical infrastructure.
- This cooperation should extend to high-speed internet corridors, renewable energy, and SME-focused industrial zones.
- Meanwhile, the U.S. has shown increasing interest in the region as part of its Indo-Pacific strategy.
- Converting this interest into concrete infrastructure and capacity-building projects would bolster the NER’s resilience and competitiveness.
- Ensuring Inclusive and Sustainable Development: Sustainable development is essential for long-term stability.
- Local communities must be actively involved in decision-making to ensure fair distribution of benefits and minimise social discontent.
- Infrastructure development should be ecologically sensitive, especially given the region’s vulnerability to seismic activity, landslides, and floods.
- Investments in climate-resilient infrastructure and adherence to environmental norms will ensure the longevity and sustainability of economic initiatives.
