Thinking business with ASEAN through conflict ridden North-East India

One of India’s prestigious and elite research organisations the IPCS, working through close interaction with leading strategic thinkers, former members of the Indian Administrative Service, the Foreign Service and the Armed Forces, the academic community as well as the media, held a seminar in late May on the strategic importance of linking India’s North-East with the ASEAN countries.

While the respected panellists have all stressed on the importance of IPCS Logodevelopment through market facilitations, infrastructure improvement and linking with SE Asian countries, very little importance had been given to the long term conflicts in the N-E area, that had been recognised in the discussion as “insurgency”.

Following is the report of this seminar, titled “India’s Northeast and Southeast Asia: Strengthening Linkages”.

Maj. General Dipankar Banerjee (presenting Wasbir Hussain’s essay)
India’s Northeast, Gateway to Southeast Asia, is a land-locked region has poor connectivity, minimal infrastructure development and is one of the most backward regions in the country, mostly as a consequence of Geo-politics. It is of great strategic value; located in close proximity to four foreign neighbors (Bangladesh, Bhutan, Myanmar and China). India’s 1992 Look East Policy aimed to usher in development in the Northeast by connecting it with the Southeast Asia. There was geographical contiguity between Northeast and Sichuan province of China.

In Northeast India, developmental gaps appear both between Bangladesh’s eastern border and Myanmar’s western border shared by the region. There are sub-standard road-linkages and a poor rail network. Strengthening sea routes between India and ASEAN is also of great importance as bulk of ASEAN-India trade ($38 billion in 2008) passes through it.  There are two prominent land links between Northeast India and Southeast Asia. Stilwell Road, built by Chinese laborers, Indian soldiers and American engineers, it provided a vital lifeline to relieve China’s besieged army as it fought Japanese occupation. Today it lies overgrown and disused. The National Highway 39 that runs from Numaligarh in Assam through Nagaland into Manipur and ends at Moreh on the Indo-Myanmar border- remains closed for nearly one-third of the year, either due to strikes and law and order problems or due to landslide and other natural calamities—can open up big business avenues.

In recent years there has been a growing realization within the Indian establishment that improvement of infrastructure along the border areas, particularly roads, is of utmost importance. This realization has sunk in after China has transformed the far-flung Tibet Autonomous Region into a well connected area, complete with a rail link through one of the world’s most difficult terrains. New Delhi has taken some initiatives for improving connectivity.

The absence of three critical components preventing India’s integration with ASEAN are: first,  standardization of railway network, second, all-weather paved roads and third. uninterrupted power.

Amita Batra

The Northeast has the potential to truly become the gateway to Southeast Asia provided its economic assets are developed optimally. A quarter of India’s trade comes from its Asian neighbours. Moreover, Asia, particularly the Southeast is being viewed as a major hub of the global economy and attracting investments from around the world. India’s 1991 Look East policy first commenced this interest in strengthening economic ties between India and Southeast Asia. India has been looking east but not necessarily through its Northeast channel.

The Northeast is a reservoir of rich natural resources including natural gas, bamboo, biodiversity, and processes a huge potential for development of hydroelectricity, oil, coal, and limestone. However, this region has missed the bus in terms of India’s economic boom. The region’s agriculture has in particularly declined in terms of its importance as well as productivity. Incidences of poverty and violence are high. There are also reports of resource depletion.. Over-harvesting, slash and burn agriculture have contributed to this decline in resources. There is a significant information gap in terms of what the situation is on the ground and actual validity of resources. Projects such as the East –West corridor (from Northeast to Gujrat) might help improve the economic plight and connectivity of the Northeast. Projects, developing the inland water transport system of the Northeast also show much potential for improving the Northeast. The renewed focus of the government is crucial in this regard.

Shrikanth Kondapalli

Unlike in the past, China’s interests and strategies towards Indian northeast and Southeast Asia are becoming recently more comprehensive and complex in nature. While China viewed these two regions from minimalist foreign and security perspectives, today while retaining some of these sovereignty concerns, nevertheless, these interests and strategies are expanding to include maximalist goals and non-traditional security aspects. Triggers for this change in China’s stance are located in the three decades of reform and opening up policies, enhancing comprehensive national strength of the country as a part of its big power ambitions, urge for expanding relations from the previous bilateral to multilateral networks and the like.

These were reflected in China playing a more active role in the multilateral diplomatic, economic or security institutions such as Association of Southeast Asian Nations Regional Forum (ARF), Bangladesh-China-India-Myanmar (BCIM), free trade areas (FTA) and the like. Also as the economic imperatives of the Chinese state are increasing, this is also impacting on the projects for expanding physical connectivity through roads, railways, riverine traffic on the one hand and exploring more secure energy supply lines. Although on several specific issues related to Indian northeast and Southeast Asia, there are several nuances and mixed outcomes, it can be argued that China’s interests and strategies towards these two regions are expanding. Secondly, another caveat is that since the two regions are diversified in nature, broader aspects of China’s interests and strategies need to be considered.

China is facing several bottlenecks in pursuing its interests in Southeast Asia and in Northeast India today. Sovereignty factor had been a key factor for the relative stalemate between China and these countries, although in the case of Southeast Asia, due to differences between the ASEAN members, China had been so far able to make some headway on South China Sea dispute. In the Indian Northeast case, due to security concerns of the Indian establishment as well as non-resolution of border disputes, not much progress had been achieved. While the local government in Arunachal Pradesh had suggested opening up border trade points with Tibet, this was not acceptable to China. On the other hand, India is wary of the dependencies of the Northeast region given the relatively industrialised south-western regions of China. In this situation, India had proposed direct links with Southeast Asia (through Myanmar) or through the maritime dimensions rather than linking up with China. On the other hand, China had been lukewarm to the Indian proposals for pan-Asian FTA as this might enhance Japan, Singapore and other countries leverages. All in all, despite prospects for increasing trade and economic development, China’s interactions with Southeast Asia and Indian northeast are fuelling concerns in some quarters in these regions.

Bibhu Prasad Routray

There are no two opinions that the impoverished economies of India’s Northeast would receive a tremendous boost if their borders with Southeast Asia are to open up linking both regions through a free trade agreement. According to estimates, to attain the objectives of the Vision 2020, a plan for development of the Northeastern region, the government investment in the Northeast will have to rise to Rupees 14 trillion from the current Rupees One trillion, while the private sector needs to take greater interest in the region. Given that only 0.5 percent of the capital formation of the private sector in the country presently comes to this region, opening up of the economy of the region to its Southeast Asian neighbours has been described as a sure shot technique to bring about a change in the state of affairs.

In the financial year 2007-08, India’s export to the ASEAN countries was calculated at US $ 16,384.25 million, which was 10.05 per cent of the country’s total export. This was an impressive growth of 30 per cent over the previous financial year. Similarly, import from the ASEAN countries in 2007-08 was valued at US $ 22,674.58 millions, which was 9.01 percent of the country’s total import. Compared to 2006-07, import from the ASEAN countries ascended at a rate of 25.35 percent in 2007-08. Such rising volumes of trade, however, have had little impact on the economies of the Northeast. Experts, thus, argue that the Northeast must be allowed to play the arrow-head role in the further evolution of India’s look-east policy.

Given that most of the states in the region continue to be affected by insurgency, the projected economic gains from such a marriage of two contiguous economies would be overshadowed by the advantages that would accrue to the armed non-state groups. Moreover, the insurgents have the ability of derailing the entire process. A scenario where the state is able to nullify any such ability of the insurgents must be reached before the international borders of the region are thrown open to the forces of globalization.

Panelists

Dr. Amrita Batra, Associate Professor at the School of International Studies, JNU

Mr. Bibhu Prasad Routray, Research Fellow, Institute of Conflict Management, New Delhi.

Dr. Srikanth Kondapalli, Professor, School of International Studies, JNU

Maj General Dipanker Banerjee
on behalf of Mr. Wasbir Hussain, Director, Center of Development and Peace Studies, Guwahati and Former Member, National Security Advisory Board, India.

Questions/Comments/Responses

How can you do business in an area where there is lack of governance and not much difference between the militants and polity?

A good amount of ‘disaffection’ is a moral blot and a security concern. The region also lacks good air connectivity due to high costs. However, the economic potential and strategic importance of the Northeast is high, which we must persevere even if it does not make economic sense in the short term.

It is often the contractors who actually benefit from funds for development schemes. How do we ensure that the benefits are not merely guzzled by the contractors?

Locals should be core participants in the development process. There needs to be an economic synergy. Often in the Northeast, ‘insurgency’ is the only going job. The circumstances in the Northeast also indicate disregard at the political level. There is not much agreement among politicians. States in the Northeast have not fostered an attitude of co-operation and instead quarrel. But there is not a need to despair. It is not a way to move forward. We have to understand that the Northeast, just like Kashmir has failed to be integrated into the Indian mainland.

Why have the packages promised by the politicians not been implemented?
This problem can be overcome. Infrastructure should come before development an in fact once it does, it shall kick start the investments. The rate at which the government implements its packages shall play a crucial role.

Besides, economics and raw materials, there is also a human element. For instance, often it is the Northeast people themselves that oppose, the construction of a railway line out of fears such as Malabari businessmen coming to destroy their livelihoods. Negative Political propaganda and narrow–mindedness also has a role to play.

The time for Comparative advantage has passed. If trade in raw materials has to happen, then why not with India as opposed to Southeast Asia? Moreover, how can spill-over effect be guaranteed? Unfettered freedoms to companies can in fact have the consequence of exploiting the local population. In the long run, manufacturing matters. You cannot be an economic hub without it.

Businesses are interested in making money, not doing charity. More businesses contribute towards making a region attractive. The spill-over effect can happen only after the businesses are a success. If 90% of the earnings have to go towards charity then no company shall want to do business and shall go elsewhere. Also, comparative advantage is a dynamic concept. If you have superior raw materials today then perhaps tomorrow you can be capable of making a niche in the manufacturing and production field also. The Northeast is whole other story. Let alone this region; even India has not yet managed a comparative advantage in the sub-continent.

Other than the Northeast, other places in India are hubs of business investment presently. In the long run, the Northeast shall emerge once the other areas have become mature economic centres.

Documenting – Harneet Kaur Kang and Tuli Sinha, Research Associates

Seminar Report # 291,

29 May 2009

Institute of Peace & Conflict Studies

New Delhi – 110029

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One thought on “Thinking business with ASEAN through conflict ridden North-East India

  1. My job took me to the Indo-Myanmar Border belt from Arunachal to Mizoram, and I know what is happening on the ground. As long as corruption is rampant and the resultant insurgency instigated by certain vested interests based in Europe and South-East Asia prevails, the concept of the Look East Policy is Pipe dream.

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