Role of Northeastern Region in Export Economy of India

UPSC Syllabus Topic: GS Paper 3- Economy

Introduction

Northeast India borders five countries and spans 5,484 km of international frontiers. It holds rich natural and human capital yet contributes only 0.13% of exports. Once periphery, it is India’s strategic and digital frontier. NITI Aayog’s NER SDG Index (2021–22) shows gains but uneven progress. The Economic Survey 2024–25 flags high potential for infrastructure and ASEAN integration under Act East. With investments above ₹1.5 lakh crore, the region is shifting from insurgency to innovation. Role of Northeastern Region in Export Economy of India.

Potential of Northeast Region in India’s Export Economy

1. Border location. The eight Northeastern States share borders with Bangladesh, Bhutan, China (Tibet), Myanmar, and Nepal. This should make the region India’s land bridge to South and Southeast Asia. Yet about 95% of trade with these neighbours still originates outside the Northeast.
2. Export basket & advantages

• Agri-surplus: The region has high marketable surplus in pineapple (95%), orange, jackfruit, banana, and cabbage. Export handling has begun through Guwahati air cargo, APEDA packing houses, and Imphal cold storage.
• Potential energy hubs: Rivers and terrain create potential energy supply hubs; hydropower and transmission corridors can make electricity a tradable commodity alongside agro-based exports.
• Tea strength, value gap: The Northeast produces over half of India’s tea. Branding and packaging remain limited. Bulk CTC dominates, keeping prices vulnerable.

Government initiative to enhance the export from Northeast state

1. Trade facilitation and connectivity:

• Direct agri-export clearance at Guwahati airport.
• Five Agricultural and Processed Food Products Export Development Authority (APEDA) packing houses for fresh fruits and vegetables (Assam, Sikkim, Mizoram).
• Cold-storage at Imphal airport to support perishables.
• Greenfield airports added in the last 11 years; Roll-on and Roll-off (Ro-Ro) waterways on the Brahmaputra.
• Bogibeel Bridge improving regional logistics.

2. Industrial and public-investment push

• Uttar Poorva Transformative Industrialization Scheme (UNNATI-2024) for industrial development with tailored incentives across all eight States.
• Prime Minister’s Development Initiative for North East Region (PM-DevINE) funding infrastructure, social projects, and livelihoods in the North East Region (NER).
• Hydro project equity support (approved August 2024) targeting about 15,000 MW capacity.

3. Agri-horti exports and value chains

• High marketable surplus crops (pineapple, orange, jackfruit, banana, cabbage) supported by airport clearance, packing houses, and cold chain.
• Mission Organic Value Chain Development for North East Region (NER) — Farmer Producer Companies (FPCs), hectares covered, farmer beneficiaries.
• North Eastern Regional Agricultural Marketing Corporation Limited (NERAMAC) expanding processed and value-added agri products and running skill training.
• Bee-keeping project with North Eastern Centre for Technology and Enrich (NECTAR) (bee boxes and accessories distributed).

4. Enterprise finance, design, and market access

• North Eastern Development Finance Corporation Ltd (NEDFi) financing Micro, Small and Medium Enterprises (MSMEs), infrastructure, and agri-allied projects; advisory services.
• North Eastern Handicrafts & Handlooms Development Corporation Limited (NEHHDC) initiatives: Purbashree.com e-commerce, mobile “Purbashree on Wheels,” design centre (Nature’s Weave), textile testing laboratory, calendaring unit, and training roles.
• Eri Silk spinning plant (Assam) and digital traceability network for weavers.
• Formation of Farmer Producer Organizations (FPOs) and Van Dhan Vikas Yojana support for tribal value addition.

5. Sector-specific policy enablers and promotion

• Geographical Indication (GI) registrations for 13 agri-horti products of the North East Region (NER).
• National Bamboo Mission impetus after bamboo’s reclassification as grass.
• Rising North East Investors Summit (May 2025) to attract global and domestic investment; multiple High-Level Task Forces (North-East Economic Corridor, tourism, investment promotion, connectivity, handlooms, agriculture value chains, sports).

Key constraints and binding bottlenecks

1. Export concentration and institutional omission

Extreme centralisation. Four States—Gujarat, Maharashtra, Tamil Nadu, Karnataka—account for over 70%of merchandise exports (Gujarat ~33%). The Northeast contributes about 0.13%, despite sharing 5,483 km of international borders.

Strategy gaps. The Directorate General of Foreign Trade (DGFT) strategic export plan carried no dedicated corridor focus for the Northeast Region.

2. Missing corridors and security-first borders

No operational trade corridor. There is no functional corridor linking the Northeast to foreign markets; planned gateways did not mature into export routes.

Gateways turned bottlenecks. Zokhawthar (Mizoram) and Moreh (Manipur) have withered into securitised checkpoints, not facilitation nodes.

Free Movement Regime (FMR) scrapped (2024). Formal cross-border movement thinned further after the FMR ended, shrinking legitimate flows and raising costs.

3. Fragile value chains and logistics gaps

Farm-to-market frictions. Producers face hurdles in aggregation, credit, storage, processing, and transport; difficult terrain and dispersed cultivation raise costs and block scale.

Perishable chains are thin. Cold-chain and warehousing remain patchy, so agro-horticulture surpluses struggle to meet export timelines reliably.

Missed niches. Bamboo exports from Mizoram cannot meet overseas demand (e.g., South Korea) due to logistics constraints, showing how infrastructure gaps erase opportunities.

4. Informal economy dominance: Porous borders, insurgency legacies, and close cross-border linkages push trade into informal routes, crowding out formal volumes and investment..
5. External shocks, geopolitics, and social-environmental sensitivities
6. Tariff shock to tea: The additional 25% tariffs (August 2025) in key Western markets threaten margins and jobs in Assam’s tea belt, where prices and wages were already tight.
7. Energy sanctions risk: Numaligarh Refinery expansion depends more on external crude, including discounted Russian cargoes; any sanctions or shipping squeeze will hit Golaghat first.
8. Regional flux:The Myanmar coup (2021) stalled overland integration; the India–Myanmar–Thailand Trilateral Highway has not delivered expected connectivity.
9. Consent and ecology:The Northeast is ecologically sensitive; projects have faced land acquisition resistance(e.g., an Asian Development Bank project in Imphal), underscoring the need for science-based environmental impact assessments, community consent, and enforceable safeguards.

Way forward

1. Build arteries and formalise trade: Fund corridors, warehouses, LCS upgrades, and cold-chain to connect NER to Bay-of-Bengal/ASEAN routes. Also balance smart security with facilitation to shift flows into formal channels with Bangladesh and Myanmar.
2. Deepen value addition: Promote branding/packaging for tea and GI products, scale organic clusters, and strengthen bamboo/agarwood value chains to capture premiums.
3. Elevate institutional voice: Embed NER representation in export strategy bodies and align incentive schemes to the region’s geography and sectors.
4. Secure social licence: Institutionalise community consent, transparent Environmental Impact Assessment (EIAs), and enforceable environmental safeguards to reduce friction and speed delivery

Question for practice:

Examine the factors that constrain the Northeastern Region’s contribution to India’s export economy despite its strategic location and resource potential.

Source : The Hindu