How India's NE can be a zone of sustainable industrial development

Atul K Thakur
In the recent decades, asymmetric migration into the North East has caused a sense of deep insecurity among the local population which kept crucial development debates overtly impacted. Consequently, and it's hardly surprising, observers find that North Eastern States have a lot of potential, though most of it still remains untapped.
This cannot be taken as a compliment since the region needs to benefit from the boom in the National economy. There is a glaring need today to facilitate inclusive growth in the North Eastern region, and for that to happen, the developmental discourses should be democratised in a way that keeps participatory governance as a model to be widely practiced and emulated.
In post-Independence India, industrialisation strategies for the North East have been dominated with a weightage in favour of heavy industries. That made the Micro, Small and Medium Enterprises (MSMEs) sector secondary in value until its real contribution was felt in the industrial development of the North East and the Indian economy at large. As per the Confederation of Indian Industry (CII) report, Creating Competitive SMEs, "SMEs constitute over 90 percent of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports.
In India too, the SMEs play a pivotal role in the overall industrial economy of the country. SMEs are thus important for the National objectives of growth with equity and inclusion."
Despite an impressive standing, the MSMEs continue facing problems at every stage of operation—whether it is in the purchase of raw materials, manufacturing of products, marketing of goods or raising finance. Moreover, the market reforms since 1991 have intensified the competition for MSMEs—both in domestic and overseas markets. That has made it essential for Indian MSMEs to cope with these challenges as well as improve and sustain competitiveness through rational cost optimisation, improved quality, offering better choices by introducing innovative measures and upgraded technology.
According to a CII-PWC report, Innovation: Changing the MSME Landscape, “Statistics are already emerging on the increasing importance of innovation and its scale and scope among the country’s firms today.”
Also, a National Knowledge Commission of India study reveals that 42 percent of large firms and 17 percent of MSMEs have introduced ‘new to the world’ innovations during the course of their business. About 17 percent of the large companies rank innovation as the top strategic priority and 75 percent rank it among the top three priorities. So innovation is an area where light industries are making the voyage with positive outcomes. The SMEs functional in the North East should also make strides to catch up with this essential trend.
In the last two decades, economic growth in the North East has been satisfactory with an annual growth rate in excess of 8 percent. A spectacular rise in the service sector has helped in the sustenance of high growth in the region. Over the decades, however, agriculture has suffered very badly due to unpredictable monsoons and faulty mechanisation offers. As early efforts of unsystematic heavy industrialisation mostly failed in the region, manufacturing became dominated by SMEs in due course of time.
Assam is better in terms of entrepreneurship development when compared to the other States in the North East. With an upscale market and good road/rail connectivity, Guwahati is naturally placed to lead the entrepreneurial activities and attract large-scale investments. But it is also true that the rest six States also present favourable atmospheres for SMEs, as the concern for environmental degradation is quite high among the local population. The local residents prefer light industries, as opposed to heavy and polluting industries that create big tussles among the different stakeholders of the industries concerned and harm the ecosystem.
A few years back, the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Konrad Adenauer Foundation (KAF) jointly undertook a study, State Level Reforms: Increasing Investments in the North East.
This report initiates the condition for constructive dialogue and engagement with policy makers and the administrative machinery in the North East and the steps that need to be taken to harness the true potential of the region. The ideas and suggestions presented in this report reflect the industry's agenda for improving industrial growth in the States.
The suggestions are however preliminary and are meant to form the groundwork for developing a blueprint for removing the impediments in the way of higher investments and growth in the region.
Sensing the promising opportunities available in the North East, now industry chambers such as PhD Chamber of Commerce and Industry (PHDCCI), CII, FICCI are increasingly focusing on this region to score well by infusing energy in SMEs, supported by local entrepreneurial skills.
(To be contd)