The recent visit of external affairs minister S. Jaishankar to Guwahati with the Japanese ambassador to review a Japan-funded water supply project ushered in yet another sporadic cacophony on the Northeast’s centrality to looking east. A few days later, Prime Minister Narendra Modi fantastically proclaimed his vision of Assam and the region powering the growth of India. These jingoistic proclamations make many folks in the region believe the region to be central to India’s Look and Act East policy. Many (even reasonably informed persons) believe that it was formulated with a view to develop the region. It is hardly surprising that this falsehood has raised unrealistic expectations.
This must be rectified and a realistic framing of the policy’s economic role can pave the way for progress. It is also time to update the discourse to keep up with the times.
Northeast in India’s Look and Act East Policy
India embarked on an eastern orientation with its ‘Look East’ policy, with a view to build closer economic engagement to bring in investments and eventually trade. Since then, it has deepened its relationship through greater trade, investments and increasingly, security mechanisms. Despite operating below potential, that relationship has grown. Trade volumes have increased, maritime relations and air connectivity continues to build. Sophisticated partnership mechanisms including in technology at all levels – whether government to government or business to business – have flourished. So clearly, the Northeast has not been central to these policies.
The Northeast, which connects India to Southeast Asia through Myanmar, continues to lag behind. If the success of a regional integration project is to encompass the eventual flurry of physical connectivity, as such grand visions usually entail, then the region comes into focus.
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Even though the cultural affinity between Northeast India and Southeast Asia is clear, the economic case is not as natural. It also continues to be captive to the geopolitics of the region. From the Southeast Asian side, it is held hostage to the development of Myanmar, where the recent coup will set back growth of fledgling border trade and any prospect of a (trilateral) highway by yet more years. It is well known that the much touted Kaladan Multimodal project languishes in inordinate delays. Even once completed, the economic benefit it will bring to the region is unclear.
Promises, promises and promises
The promise of prosperity arriving in the region through connectivity is hinged on the idea that trade will usher growth and development. The literature on this principle presupposes several pre-conditions and factors that will allow for the development of the region. Further, there needs to be corresponding preparation in terms of leveraging these grand infrastructure on the ground. Much of these conversations have been stuck. The current discourse is focused around products that the region can export as goods.
However, as we know, trade mostly takes place in the context of global value chains in 2021. About 70% of international trade today involves global value chains (GVCs), as services, raw materials, parts, and components cross borders. Despite the setback to this process due to the pandemic, it is likely that trade will continue to take this form. The preparation has to be about identifying which are the areas in which products and services of the region can be integrated into regional and global chains. This is good news, as it eliminates the need to build from the ground up, package goods and market them in an already competitive products space. The other opportunity that presents itself in the pandemic crisis, where several of these value chains are being re-evaluated, allows the region to quickly throw its hat in the game.
Numerous papers, panel discussions or conferences evoke the same type of half-baked ideas around exporting agricultural produce – in bulk to Southeast Asia! Some of which does not preclude the idea that capacity is poor and overall, the region’s trade must be based on a strategy around feeding into the low-scale, high-end products segment. For instance, high quality organic ginger that is processed with the help of a Japanese or Singaporean company or organic medicinal turmeric from Meghalaya branded by global companies!
Any scale-related production may be better off orienting itself southward to Bangladesh, rather than the east. Bangladesh provides a ready and huge market. It is a rapidly growing economy whose per capita income will surpass India’s soon. There are historical trade links and routes that can be easily revived. However, there is great anxiety and concern with opening up to Bangladesh and this has to be addressed sensitively.
Is it a lost cause?
At various investment forums looking eastward, there is a perplexing mismatch in presenting what Southeast Asia or Japan can do and invest in the region. Government officials keep presenting opportunities such as a desire to engender private partnership projects – such as in the over 1,000-crore integrated Loktak Lake development project in Imphal. These are better financed through bilateral deals between governments or multilateral funding agencies, with provisions for political and operational risks.
If the interest to engage and build connections of prosperity is through the people-to-people route, it must take into account the aspirations, tastes and preferences of the people. It must also keep with the times. The conversation about exporting of primary products must also keep pace to pave space for the new. Digital connectivity and the industries associated with the Fourth Industrial Revolution present opportunities. Anecdotal and prima facie evidence suggest that the youth of the Northeast are starting to develop competitive advantages in technical and creative skills that can easily feed into the global services value chain. Take the case of the global gaming industry. It is likely to soon be estimated roughly at $250 billion and growing rapidly. This is similar in size to the global agro-food processing industry which has received disproportionate association with the region.
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In a world of super specialisation, the future could lie in picking niche markets and developing infrastructure and unparalleled skills over time. Consider the prospect of music scoring for the games and industry segment. It is a rapidly growing segment. The undeniable music talent that lies in the region can feed very well on to this. Fancy the music scoring and graphics of the next version of League of Legends, Grand Theft Auto or FIFA games being produced by a bunch of folks collaborating and sitting in Aizawl, Shillong and Imphal – working with developers based in Silicon Valley, Singapore or Tokyo. Or music from the next big Korean animation being scored out of the region.
The region is certainly not central to the Act East Policy, but given that New Delhi has framed its eventual success as also integrating the region with the east, it is central to that. These initiatives may test the waters for the precursor to the how big ticket development collaboration might fare. The type of success stories that these areas of collaboration throw up may be the stories that the region badly needs, as well as a providing as an opportunity to finally announce some achievements.
Laldinkima Sailo is a public policy and international affairs advisor. He is Editor, ‘Connecting India to ASEAN: Opportunities and Challenges in India’s Northeast’. Views are personal.