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Introduction p6/The macroeconomic scenario p8/Potential for north east India p14/
Necessary infrastructure development p23/Necessary policy initiatives p40
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2 PwC - FICCI
Foreword
North east India, home to 45 million people and surrounded by 5300 kms
of international borders could easily be Indias portal to the east. Given its
geographic position, the richness of resources and the increasing focus on
engaging with the east, the region could very well become the new growth
engine for the country.
In fact, during the early part of the previous century, the north east was at the
forefront of economic and social development. The region was a net foreign
exchange earner and had a per capita income higher than the national average.
A seamless border with East Bengal and Burma, access to riverine and overland
routes of communication ensured that the region had begun to emerge as
a major hub of economic activity. All these changed when the country was
partitioned in 1947 and the region was virtually sealed from almost all sides.
While the narrowness of the 22-km link with mainland India has proven to be
a stumbling block for development, we believe the long international border of
over 5300 kms with countries such as Myanmar, Bhutan, Bangladesh and China
can be turned to advantage for the region.
Over the course of the last two years, the North East Advisory Council of
FICCI has deliberated at length about the idea of connecting the region. We
have consulted a cross-section of people from the government, businessmen,
professionals in the north east and in our neighbouring countries. While our
belief in the potential of the region has grown stronger, it has also become
apparent that the most critical part is to restore the connectivity linkages.
Some of the key ideas envisaged in the report include the development of a
seamless river transport system, a 4000-km-long ring road connecting all the
north eastern states, development of an economic corridor connecting north
east India with Myanmar and Bangladesh, 53 development nodes, border
townships, development of a railway network, a number of new airports, etc.
We are hopeful that the North East Connectivity Summit will help refine
and transform some of these ideas into reality. We are happy to have
PricewaterhouseCoopers as our knowledge partner for the summit. This
FICCI-PwC report will serve as a good reference point for the discussions on
all connectivity related issues pertaining to the north east. We would be glad
to play a facilitating role by connecting stakeholders in the state governments,
central government, business and various social groups, to help achieve the
objective of seamless connectivity.
Ranjit Barthakur
Chairman
FICCI, North East Advisory Council
Dr A Didar Singh
Secretary General
FICCI
Preface
The north east region of India comprising Arunachal Pradesh, Assam,
Meghalaya, Tripura, Mizoram, Sikkim, Manipur and Nagaland constitutes 8% of
Indias geographical area. The region is blessed with rich natural resources and
accounts for 34% of the countrys water resources. It possesses almost 40% of
Indias hydro power potential.
But despite being blessed with a fairly wide resource base, the region remains
among the most under-developed areas in the country. Partition of the country
resulting in the formation of Bangladesh has turned the region into a landlocked
territory, with just a 22-km wide connecting link called the Chickens Neck
(through Siliguri) with the rest of India.
The region shares international borders with China, Myanmar, Bangladesh and
Bhutan summing up to a total length of 4,500 km. India and these countries
constitute a market of about 2.81 billion people which is roughly 40% of the
world population and due to its geographical location, the north east of India
has the potential of transforming into an economic hub.
This shows that most of the trade between India and its eastern neighbours
is happening from industries in regions other than the north east. From the
perspective of geographical location and cost savings, it makes more sense for
these industries (at least for those industries which raw material base is present
in the region) to locate themselves in north east India.
This paper attempts to map the above requirements across critical infrastructure
sectors as we wish to elicit discussions around the interventions required to
realise the true potential of the north east.
Manish R Sharma
Leader, Capital Markets and Infrastructure
PwC India
Stretched far across the eastern arm of India, the eight states
of Arunachal Pradesh, Assam, Meghalaya, Tripura,
Mizoram, Sikkim, Manipur and Nagaland are the most
unique part of India. These states with a total area of 2,62,179
sq km, occupy about 8% of Indias total geographical area. The
region is bestowed with rich natural resources, which bring in a
key ingredient for development. Forest cover is about 52% of the
total area.
Most of the states have a good and inland waterways remained fairly these states receive support from the
mineral resource base and water developed and enabled trade, both central government under various
is also present aplenty. With two within the region and outside. schemes. Since the late 1990s, the
major rivers, Brahmaputra and government of India has been making
Barak, flowing through the region, However, today after six decades concerted efforts for the economic
the north east accounts for about of independence and even with development of the north east.
34% of the countrys water resources a fairly wide resource base, the Apart from substantial investments
and possesses almost 40% of Indias region remains among the most in infrastructure, a special package
hydro power potential. Along with underdeveloped areas in the country. of incentives aimed at industrial
the availability of varied natural The state of affairs at the time development was announced in
resources, the region has a fair of Independence left the region 1997. This was followed by the more
amount of diversity in its population. completely aloof from the rest of comprehensive North East Industrial
With a total population of around India. Due to Partition, the region was and Investment Promotion Policy in
40 million people (which is about turned into a landlocked territory, 2007.
4% of Indias total population), the with just a 22-km connecting link
north east is home to over 200 ethnic (through Siliguri) with the rest of Despite special assistance schemes
groups. India. of the government, the states in this
region have largely remained laggard
Before Independence, this region Most of the boundary of the region is in comparison to the other states of
was among the most industrially an international border shared with the country. They have registered an
developed regions in the country. The China, Bhutan, Myanmar, Bangladesh annual average growth rate of 6.9%
industrial sector was based mostly and Nepal. This had an adverse impact since 2005-06, which is below the
on the rich resource endowments on the industry and trade from the national average of almost 8%. In
of the region. Tea plantation and region. Additionally, undertaking 2004-05, the regions contribution to
tea manufacturing, plywood any development in the region has the overall national GDP was about
manufacturing, coal mining and oil been challenging due to difficult 3% but now stands at mere 2.66% (in
refining were some of the prominent topography and political divisions. 2011-12).
industry segments. Furthermore,
Given this history of difficult Further, there have been wide
the British set up one of their earliest
circumstances, the states in the disparities in growth recorded across
railway lines in the region which ran
region have been granted the status the eight states. Some states such as
between Dibrugarh and Chittagong.
of special category. In order to meet Meghalaya, Mizoram and Tripura
Transport through railways, roads
their developmental expenditures, have grown in sync with the overall
6 PwC - FICCI
GDP growth of the country. However, Average annual growth rate over the period 2005-06 to 2011-12 (in %)
others such as Manipur, Assam and
Nagaland have seen only moderate
Agriculture Industry Manufacturing Services
growth. This differential in economic
performance is also reflected in the Arunachal Pradesh 8.3 8.0 8.6 10.5
per capita income of the states. Per Assam 3.4 2.5 1.8 8.9
capita income in Arunachal Pradesh,
Meghalaya and Sikkim have exceeded Manipur 7.6 4.4 6.9 6.6
the all-India average level but others Meghalaya 2.6 10.1 25.6 8.8
such as Assam, Manipur and Mizoram
Mizoram 10.4 12.7 8.3 9.6
have per capita income much below
the average for India. Sector-wise Nagaland 3.3 11.2 15.5 8.0
analysis shows that agriculture still Sikkim 4.2 37.1 190.0 9.4
remains a predominant economic
activity in the north east employing Tripura 4.8 9.4 5.3 8.3
a majority of the population. Though NER 4.0 6.0 6.9 8.7
the contribution of agriculture to
the GDP for the region has fallen Source: Central Statistical Organisation
from 20.9% in 2004-05 to 17.2% in
2011-12, it is still relatively high in
comparison with the national figures.
Industry and services contribute over Accordingly, three fundamental Accordingly, there is an urgent need
25% and over 50% respectively in areas that need to be focussed on for for not only augmenting international
the regions GDP. The manufacturing the development of the north east trade with the NE region acting
sector registered an annual average are economic, ecological and social as a major gateway, but also the
growth of 6.9% during 2005-06 development. The primary hurdle to development of key infrastructure in
to 2011-12, as against 9% average development in all the three fronts is the region.
growth registered for India as a whole. the lack of adequate infrastructure.
Further, the contribution of the Lack of physical and industrial PwC India and the Federation of
manufacturing output from the region infrastructure facilities have been a Indian Chambers of Commerce and
to the total manufacturing output of significant roadblock for the small Industry (FICCI) have prepared this
the country is low at around 1.2%. and medium enterprises in the region knowledge paper to elicit discussions
as it impacts both the movement around the potential of overall trade
There has not been much growth of goods and people in the region. and commerce from the region and
in large-scale industries and the It is therefore imperative that the the necessary physical and policy
industrial sector in the region primary developmental focus be on interventions required to meet this
primarily consists of small and infrastructure. objective.
medium enterprises. Most of the large
industries are based in Assam and are The region is strategically placed
in sectors such as refining, cement, to act as a land bridge between
chemical and fertilisers, paper and mainland India and the ASEAN
paper products. Also food processing countries because of its geographical
is one of the fastest growing segments connect. The proposed infrastructure
in the region. projects such as Asian Highway 1 and
2, connecting Asian countries, will
Detailed studies on the north east pass through the NE region of India.
region, assessing major impediments Hence, there lies a great opportunity
to industrial growth in the region for increasing Indias trade with
reveal that industrial units in the ASEAN and other border countries,
region face constraints in the form which can be fruitfully exploited by
of land acquisition, availability of creating world-class infrastructure for
power, transport and logistics, credit transport, logistics, processing and
disbursal, skilled labour, marketing value addition.
and taxation issues.
Gateway to the ASEAN 7
The macroeconomic
scenario
India has emerged as one of the worlds most attractive
investment destinations. The opening-up of FDI in several
sectors of the country and the relaxation of norms by the
government has attracted several foreign investors, competing
for greater share in the Indian market.
According to a World Bank report, 2.1. Economic affairs in the facilitate higher mobility of labour
India currently holds 6.4% share ASEAN countries and capital within the region and will
of the global GDP on purchasing also promote connections with the key
power parity basis. The prospects The ASEAN bloc comprising 10 economies in the region, including
of the industrial sector in the countries has an aggregated economic India. Projects to increase and improve
country looks positive, as industrial size of 2.3 trillion USD2. It is the third connectivity, communication and IT
production grew at a 13-month high pillar of growth in Asia after China networks are already in the pipeline.
rate of 3.4% in April 20141, mostly and India, with a GDP growth rate of
driven by electricity generation and 6% per annum over the last 15 years. The ASEAN blocs annual real GDP
manufacturing, as indicated by the growth is expected to reach around
Index of Industrial Production (IIP). The region seeks to achieve a single 6% in the next five years. The
In the forthcoming years, automotive, market and production base through emerging middle class will also fuel
technology, life sciences and consumer an ambitious integration effort to the growth in consumption in the
products sectors are expected to grow. region.
Economies of ASEAN, India and China
Exports posted double digit growth
in May 2014, as the shipment of key India (2012)
to become the worlds third largest GDP per capita (USD) 1,492
8 PwC - FICCI
2.2. Potential of trade Indias bilateral trade with ASEAN + 4 countries
between India and ASEAN
180
countries plus China, Vietnam
Nepal, Bhutan and 160
Thailand
40 Brunei Darussalam
1,044
1,200
has been a hurdle, the regions long
954
871
1,000
international border of more than
796
727
- 8%
607
C.A
In billion USD
507
600
463
400
248
227
208
190
152
151
122
200
92
91
2016-17
2015-16
2014-15
2017-18
2012-13
2013-14
2018-19
2031-32
2021-22
2030-31
2020-21
2019-20
2026-27
2034-35
2025-26
2024-25
2032-33
2027-28
2033-34
2009-10
2022-23
2023-24
2028-29
2029-30
2008-09
On the contrary, the share of the Indias export to Myanmar, Bhutan and Bangladesh (in million USD)
north east in this trade has been
consistently hovering in the range
of 1 to 2%; thereby suggesting the 6167
50000
45000
40000
35000
95%
30000
INR crore
25000
20000 of the exports to Bangladesh, Bhutan and
Myanmar has been from regions other
15000 than the north east of India
10000
5000
0
2014
10 PwC - FICCI
2.3.1. Why north east: A
logistics cost perspective
From the above analysis, it is evident
that around 95% of the total export to
countries such as Bangladesh, Bhutan
and Myanmar and around 99% of Delhi Bhutan
Nepal
the total trade with these countries Guwahati
is happening from regions other than
the north east. Alongside, from the India
Dhaka
Myanmar
perspective of geographical locations, Mumbai
Bangladesh
industry will save significant logistics Yangon
Dawei
Similar savings may be observed for Chennai
Andaman
Myanmar and these vary in the range Islands
31.48 32.20
29.60 1.48
22.20 16.67
31.48
6.67
6.67
Cost from Dhubri Cost from Cost from Vizag to Cost from Chennai
Total logistics cost
to Dhaka Guwahati to Dhaka to Dhaka
Sea voyage cost from vizag to dhaka
Dhaka
Load port and discharge port average charges
Last mile road bridging cost
File mile road bridging cost
Source: Searates.com, Platou Research Singapore, Bunker World and PwC analysis3
68.77 69.16
59.80
31.87
Total logistics cost (from
Moreh to Mandalay)
3 The above savings may vary from location to location, change in ports, bunker prices, charter rates of the
sea vessels, diesel prices that influence the road connectivity, etc.
Gateway to the ASEAN 11
2.3.2. Assessment of trade
potential
There is a huge potential of trade with
Bangladesh. World Bank statistics on
Indias trade status with Bangladesh
points out the following interesting
facts:
12 PwC - FICCI
Projected trade potential with neighbouring countries @ 10% YoY
160,000
140,000 141,117
125,037
120,000
100,000 102,708
80,000
60,000 64,055
40,000
33,931
20,000
-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
The demand for energy will rise with NE India has the trade
rapid economic development. Supply potential of anywhere
from Myanmar with rich deposits of
between 35,000 crore and
natural gas will be a great advantage
to the Indian economy. ONGC is 180,000 crore INR.
already involved in the exploration of Having assessed the potential
natural gas in Myanmar and pipelines opportunity in the region, it is
can be laid through the NE region. The pertinent to understand the existing
gas supply from Myanmar coupled infrastructure scenario, challenges
with the Tripura gas reserves can be and development interventions
used for thermal power generation required to realise the above potential.
and other industrial uses in the region
as well as in other parts of the country.
Cambodia,
Lao, Trade potential
The regions % share Thailand and of NE by 2023-24
of total trade with -> Nepal Bhutan Bangladesh Myanmar Vietnam (crore INR)
Scenario 1 30% 30% 10% 10% 0% 35,158
3.1.1. Connectivity
The NE region is connected by rail
and road with the rest of India only
through the 22-km-wide Chickens
Neck (Siliguri Corridor). Lack of
connectivity through Bangladesh
has made connectivity between most
parts of the region and mainland
India rather difficult and circuitous.
For example, the distance between
Agartala and Kolkata through
Bangladesh is only 457 km while
through the Chicken Neck, the
distance becomes 1650 km.
3.1.1.1. Roads
Road Density in north east India The total length of NHs in the region
Road is an important mode of travel is 8,480 km and the states have 5,711
Road Road km of state highways (SHs) and
in hilly areas as other modes of travel
States density/1000 density/1000
are either too expensive or difficult. sq km population
15,154 km of major district roads
At present, the road infrastructure (MDRs). In most NE states, village and
Arunachal 196.96 13.77
is relatively deficient in the region, district roads are dominant. These
although the regions road density Assam 2936.51 7.83 roads are particularly important for
per capita is significantly higher as Manipur 739.11 6.98
facilitating intra state movement of
compared to the rest of the country people and freight.
which is intuitive, given the low Meghalaya 438.67 3.89
density of population and the hilly Mizoram 292.11 6.35
terrain of the region. The road
Nagaland 1345.32 10.27
length per unit area is higher only in
Nagaland, Assam and Tripura. The Sikkim 263.95 3.17
percentage of surfaced road in the NE
Tripura 3026.23 9.09
region is only 29% compared to the
national average of 62%. India 965.73 2.77
14 PwC - FICCI
3.1.1.2. Railways The hilly terrain of the region makes
it difficult and expensive to set up
The region has about 2,600 km of rail networks in the region. This has
railway lines, but till today only two led to absence or nominal presence
state capitals are connected by railway of railway lines in the hilly states
with most of the lines lying in the such as Arunachal Pradesh Manipur,
states of Assam and Tripura. While Meghalaya and Mizoram.
the railway ministry has announced
major railway projects for the region
as well as its intention to connect all
state capitals of the region, most of the
projects are running behind schedule.
Meghalaya 0 22429 0
Sikkim 0 7096 0
fully operational, while the Baljek Bangladesh Border Pandu Neamati (369 km): Sadia
airport is under construction Pandu (260 km): For 300 days in a year the
and up-gradation. In Sikkim, For 330 days in a year the LAD is 2 m, and 1.8 m for
LAD is 2 m, and 1.8 m for the rest of the year
airport construction is underway the rest of the year
in Pakyong. A greenfield airport Dibrugarh
has been proposed near Itanagar,
environmental clearance for which Neamati
Source: PwC
Karimganj
Badarpur
Source: PwC
16 PwC - FICCI
3.1.2. Power
The north east has per capita
power consumption of around
249 kWh which is low compared
to the national average of 778
kWh. Despite low per capita power
consumption and having great
potential for power generation,
the region still suffers from power
shortages.
Per capita power consumption comparison
among the world, India and the north east
(2009 - 10)
3500
3000
2500
2000
1500
1000
500
0
World India North East
A comprehensive short-term,
medium-term and long-term plan
for the power sector is required to
ensure that lack of power does not
continue to impede development.
Comparison of select commodity-wise exports of the NE region with total imports by Bangladesh, Myanmar and Bhutan from India (2013-14)
(million USD)
Cotton 19.74 0%
Edible fruit and nuts; peel or citrus fruit or melons 56.78 9.69 0%
Raw hides and skins (other than fur skins) and leather 0.09 8.76 1%
Salt; sulphur; earths and stone; plastering materials, 57.20 20.73 7.92 200% 5
lime and cement
Wood and articles of wood; wood charcoal 3.12 748.74 0%
Source: Office of the Commissioner of Customs, Shillong, EXIM data bank, Ministry of Commerce, Government of India and PwC analysis
4 The percentage is high as tea is exported all around the world and not primarily restricted to the above analysed countries.
5 Minerals and its products are prominent exports from the NE region to areas other than Myanmar, Bhutan and Bangladesh.
20 PwC - FICCI
The highlighted rows in the above The integration centres should be Once set up, the facilities will
table indicate the areas that can be designed to provide the following: create alternative urban areas,
developed in the NE region. There decongest new cities, promote
is high potential as the primary Logistics facilities for trade and trade and business, and create job
demand for such products exists movement of goods opportunities for people in the
in the neighbouring countries. Travel amenities at par with surrounding areas. These facilities
Currently, this demand is being international standards will also make improved social
fulfilled by the other regions in infrastructure facilities accessible
mainland India. To serve countries The nucleus for upscaling to rural population in the influence
such as Bangladesh, Myanmar and economic activities in the area areas.
Bhutan, industries located in the
NE region will have a significant An environment for economic Infrastructure development
logistics cost advantage vis--vis development by the creation of along these development nodes
industries located in other parts multiple planned urban centres is expected to bring in cumulative
of India. It is equally important for with modern amenities investments of 42,500 crore INR
the region to graduate up in the over the next 15 years. Around
The potential locations for 70% of the investment is expected
value chain by exporting semi- development nodes are listed in
finished or finished products, to be in Assam, Arunachal Pradesh
the table below: and Meghalaya.
rather than exporting raw
materials. Together, this makes
a compelling business case for
setting up an industrial base in
this region to meet and serve the State Locations
demand of these neighbouring Arunachal Pradesh 1. Bhalukpong 5. Tezu
countries. 2. Bomdila 6. Daporizo
3. Sela 7. Zero
4. Pasighat
Creation of development
nodes Assam 8. Srirampur 16. Charduar
9. Krishnai 17. Bokajan
10. Bijni 18. Silonijan
The first step to attract industries 11. Darranga 19. Amguri
to the region is to improve the 12. Udalguri 20. Makum / Dumduma
industrial, transportation and 13. Sonapur 21. Kalain
14. Balipara 22. Karimganj
support infrastructure. Currently, 15. Koliabor 23. Jirighat
the region suffers from issues
Manipur 24. Mao Gate 27. Oinamlong
like poor roads and connectivity, 25. Palel 28. Churachandpur
inadequate power and storage 26. Ukhrul
facilities, insufficient number Meghalaya 29. Nongpoh 32. Baghmara
of custom clearance facilities, 30. Ladrymbai 33. Tura
31. Nongstoin 34. Phulbari
inefficiency in handling, etc.
These issues are hindering the Mizoram 35. Kolasib 38. Champhai
36. Serchip 39. Saiha
prospects of serious investments 37. Lunglai 40. Mamit
by industrial players in the region.
Nagaland 41. Mokokchung 45. Wakching
Hence, we propose the setting up 42. Piphema 46. Bhandari
of development nodes at strategic 43. Wokha 47. Naginimara
locations along the transportation 44. Tuensang
corridors and also the feeder Tripura 48. Dharmanagar 51. Bishalgarh
49. Manu 52. Satirbazar
corridors. It is proposed that 53 50. Teliamura 53. Sabroom
development nodes be set up
across the region in tandem with Source: FICCI analysis
Meghalaya
Assam
The identified nodes can be
20%
30% developed as 100-acre nodes
Manipur with industrial townships. While
2020 2025 2030
9% 70% of the area will be allocated
Arunachal Assam Manipur
Pradesh for industries, the remaining
Meghalaya Mizoram Nagaland 30% will be used for developing
Tripura Total social infrastructure. The cost of
Source: Capex database and PwC analysis providing basic infrastructure such
as power, water, internal roads,
Employment generation: Direct and induced sewerage and drainage networks,
street lights, effluent transmission
14.80 and solid waste management has
been estimated at 50 crore INR per
100 acres.
8.46 Investment for providing basic infra to
5.90
development nodes
3.38
State No. of nodes Investment
required
(INR crore)
Direct Induced
Employment
Assam 16 800
Employment
Meghalaya 6 300
Mizoram 6 300
Nagaland 7 350
Sikkim NA NA
Tripura 6 300
Total 53 2,650
22 PwC - FICCI
Necessary infrastruc-
ture development
4.1. Integrated economic 4.1.1. Project concept
corridor connecting all the
The project could be developed
development nodes around a system of two integrated
transportation corridors running from
An integrated economic the Chickens Neck area to Tinsukia
corridor can be developed in Assam and Sabroom in Tripura. A
in north east India for band of about 150 to 200 km on both
exploiting the potential the sides of the freight corridor should be
region has to offer developed as the economic corridor,
thereby including all north eastern
To take advantage of the regions states in the project influence area.
geographic location and speed up the In addition, feeder routes (rail and
evolving connectivity with Southeast road connectivity) will need to be
Asia and the ASEAN, it is proposed developed to connect the hinterland
that a north east frontier economic and production areas.
corridor should be developed.
Economic corridors that connect The proposed corridor would connect
economic agents along a defined the region with the Asian Highway
geography could provide a vital and the Trans-Asian Railway project,
boost to the pace of development thereby connecting with markets in
in resource-rich regions such as the ASEAN countries, Bangladesh,
the north east, where economic Bhutan and Nepal, apart from the
development has been slow. large domestic market in mainland
India.
Economic corridors provide
connection between economic nodes The economic corridor will not only
or hubs, where large amount of provide a structure for industrial
economic resources and actors are development, but also facilitate
concentrated. They do not stand development of important service
alone, as their role in regional sectors like tourism, healthcare and
economic development can be education, and further spur urban
comprehended only in terms of the development.
network effects that they induce. They
link the supply and demand sides
of the markets. To harness the full
potential that could be unleashed by
improved connectivity, it is proposed
that an economic corridor along the
primary route of connectivity from the
west to the east, with a connection to
the neighbouring countries, should be
developed in the north east.
24 PwC - FICCI
However, to fully integrate the Estimated investments for developing the stretches of Asian Highway running through north
region with the Asian Highway, east India
approximately 431 km of roads in
NH no. Name of the Section Length (km) Estimated cost
the region that are Class III or below, state (crore INR)
which are on the Asian Highway will
NH 39 Nagaland Kohima Dimapur 81 1175
have to be upgraded to Class I.
Stretches of the Asian Highway in NH 36 & NH Assam Daboka Nagaon 145 1192
37 Jorabat
India and investment required for
their enhancement NH 40 Meghalaya Jorabat Barapni 80 800
Shillong
26 PwC - FICCI
A network that provides Road network connecting Bhutan to the IWT terminal at Dhubri
Bhutan an access to
Brahmaputra via the IWT Bhutan
terminal at Dhubri Sarbhong Geylengphu
Amteka
Kk-M-6 Kalamati
Ch-M-3
The network will connect Bhutan Ch-M-1 (Proposed
Bongaigaon
beyond to Bangladesh and Kolkata Karigaon
Bijni
through the IWT mode. It will make NH31C
Kokrajhar
Gauripur Bilasipara
between India and Bhutan stood at
approximately 3,046 crore INR in SH28
Dhubri
NH31
Meghalaya
this trade movement as well as trade
between Bhutan and Bangladesh, with
the IWT terminal at Dhubri as the key
node in the trade path to Bhutan.
Source: FICCI
6 The investment figures in the table are the average of the figures estimated based on the area and population ratios.
28 PwC - FICCI
4.1.2.2. Railways New border railway line
respectively.
Source: PwC
30 PwC - FICCI
The use of IWT has so far been Development of IWT will help
limited and the sector lacks adequate the development of commercial
infrastructure. Some of the issues the infrastructure and river tourism,
sector is facing are as follows: which in turn will lead to increased
employment generation and wealth
NW2 has a least available creation not only for the region,
draft (LAD) of 2 metres for but more importantly for the local
approximately 70% of the stretch communities. The key objectives for
(from Bangladesh border to development of inland waterways in
Neamati) for 300 days and for the north east are listed as follows.
NW6, the LAD varies between 0.5
metres to 1.85 metres during the Develop world-class and cost-
year. For good navigation, an LAD efficient waterways on the
of 2 metres is required. Brahmaputra and the Barak in
Assam through a PPP model.
Moreover, the protocol routes 1 and
2 through Kolkata are not navigable Facilitate passenger and cargo
throughout the year and even transportation round the year.
dried up in some months in the
winter. These protocol routes need Position IWT for extending linkages
to be developed. However, there to mainland India, Bangladesh and
is a conflict between India and South East Asia in the future.
Bangladesh on who will invest for
Upgrade and support the
the development of these routes.
development of semi-urban and
The course of the river in NW2 rural infrastructure.
keeps changing, which further
Maximise the potential of tourism
complicates the building of
using the environment-friendly
permanent terminals.
mode of transport to connect with
There are 13 terminals on NW2 the diverse tourism assets of the
and 2 on NW6, out of which only region.
the Pandu terminal qualifies as a
Integrated development of all aspects
terminal in the real sense.
of the sector is necessary.
Night navigation facility is
Infrastructure development for IWT
inadequate. On NW2, night
navigational facility is available
Route Terminals Repair facilities
only on the stretch from Dhubri to
Ensure LAD of 2.5 metres Enhance the cargo Provide adequate repair
Neamati and on NW6, the entire
along the entire stretch. handling capacity of the facilities.
stretch do not have night navigation terminals.
facility. Provide uninterrupted
navigational aids along the Provide multi-modal
entire route. connectivity.
Development of the major waterways
could further extend the transport Establish permanent
channel stabilisation
network for bulk goods and ferry
works.
services, thereby significantly
expanding connectivity across urban
Infrastructure development for IWT
and rural areas and social segments.
Sadiya
Neamati
Dhubri Silghat
Pandu
Terminals with
repair facilities
Terminals
Karimganj
Badarpur
Source: PwC
4.1.2.4. Airports
Air connectivity will play a key role in Source: FICCI
improving the overall connectivity to There are 12 airports and airstrips in great strategic significance and is
and in the region. Some key steps to the region, which are currently not going to have a positive impact on
be taken are listed below: in use. All the 12 airports need to be many sectors of its economy.
developed to run dedicated regional
Ensure flight connectivity to Tezpur air service with smaller aircrafts. These airports can be developed as
and Tura airports. regional and low-frill airports, where
Apart from the direct benefit in regional airline operators can
Expedite development of greenfield to tourism, development of air operate.
airports at Itanagar, Kohima and connectivity in the north east has
Pekyong (Sikkim).
32 PwC - FICCI
4.2. Port townships The proposed developments could
include the following:
Apart from the development nodes
mentioned above, to utilise the Port and associated facilities Industrial and allied activities Township and other facilities
unique natural advantage provided Cargo stock yards and cargo Developed plot for industries Integrated township
by the river systems of the region and handling facility
Warehouses Connectivity with major
re-energise IWT, it is proposed that Railway yard and wagon transport corridors
Standard design factories
modern port townships be established loading
Accommodation, market,
along the routes of the rivers. Based Equipment rental and leasing
Food grain storage facility food court, etc
centres
on preliminary assessments, it is
Fertiliser and bulk cargo Power, water, internal roads,
proposed that 20 such river port Inland container depot
terminal waste management
townships be developed on the
Liquid handling and tank
Brahmaputra and Barak rivers. The Farm for petroleum products
river ports that may be developed are
Passenger terminal
listed below.
Identified port townships Substantial investment will be
required for development of these port
Brahmaputra Barak townships.
1. Dhubri 1. Annapurna
Ghat
2. Jogighopa
2. Siddhesh-
3. Sualkuchi
wari Ghat
4. Palasbari
3. Bhanga/
5. North Guwahati Malua
6. Noonmati 4. Sonabarighat
7. Kharupetia 5. Salchhapra
8. Tezpur/Silghat 6. Kalinagar
9. Dhansirimukh 7. Rani Ferry
10. Neamati Ghat 8. Lakhipur
11. Dikhomukh
12. Oirumghat
Residential facilities
Healthcare facilities
34 PwC - FICCI
4.4 Power sector awarded in February 2008. All three The government needs to intervene
development units of the project were scheduled to resolve the issue and ensure early
for commissioning during the 11th commercial operations and smooth
The north east has an installed Plan. However, the local law and order functioning of the plan.
capacity of about 2905MW and situation, frequent bandhs, etc have
the current requirement is about resulted in the delay of the project by 4.4.2. Transmission
2,251MW. However, due to low plant at least two years. Urgent steps need
load factor, the current demand is to be taken for early completion of the The Eastern-North Eastern Power
not being met from the installed project, if necessary by deployment of Corridor comprises one twin-circuit
capacity and the region is heavily additional forces. 400MW line and one twin-circuit
dependent on imports. The situation 220MW line. These lines should be
is further aggravated by the fact that Fuel for the project is to be sourced able to safely carry about 800MW of
the connectivity with the Eastern from Eastern Coal Fields and power. However, the total transfer
Grid is weak and has limited carrying Margherita Coal Fields. North Eastern capability (TTC) available to the
capacity. Coal Fields at current capacity can region is in the range of about of
produce only 1.2 million tonnes 600MW and after providing for
Long-term forecast of electrical energy of coal per annum, whereas the reliability margin, the TTC is reduced
requirement in the north east (MW) requirement from the Bongaigaon to 550MW. After accounting for
Thermal Power plant is expected to long-term and medium-term open
2021 -22 2031 - 32 be around 1.65 million tonnes. As access commitments, the available
Arunachal Pradesh 177 365 further expansion of the coal field may transfer capability for short-term
not be feasible due to environmental buying is further reduced to 320MW.
Assam 2,534 5,033
concerns, alternative arrangements This often gets revised downward due
Manipur 497 1212 for supply of coal from Bihar or to contingencies and the absence of
Meghalaya 596 1112 Jharkhand need to be made. redundancy.
Mizoram 352 723 Transportation of coal is proposed This problem becomes acute during
Nagaland 271 554 to be done through IWT. While the the lean hydro season when the region
Indo-Bangladesh transit and trade needs to import a substantial amount
Sikkim 176 341 of power through the ER-NER link and
protocol will allow transportation of
Tripura 472 913 coal through Bangladesh, the protocol the available transfer capability (ATC)
North east 5,075 10,253 is currently renewed every one or for short-term open access often gets
two years. Efforts should be made to reduced to 150 to 200MW.
renew the protocol for a longer period
4.4.1. Issues in power Therefore, the transmission capability
of at least 10 years.
generation of the ER-NER link needs to be
4.4.1.2. ONGC Tripura Thermal upgraded urgently. Minimum ATC for
The region has the potential for Power short-term open access needs to be
generating over 50,000MW of maintained at 500MW.
hydropower apart from substantial A joint venture between ONGC, IL&FS
possibilities for gas-based and coal- and the government of Tripura is Creation of additional transfer
based thermal generation. However, setting up the 726.6MW gas-based capability between ER and NER is
most of the potential remains thermal power project at Palatana in essential in the short term to ensure
untapped due to various reasons, Agartala. The first unit of the project that the region is in a position to
including environmental concerns. was inaugurated by the President of procure power from open sources.
Two thermal power projects at India on 21 June 2013. However, since This in the long term will help
Palatana and Bongaigaon are at an then the unit has been shut down due evacuate power from the region, given
advanced stage of implementation, to problems in gas supply. that a number of power projects are
but due to various reasons detailed planned in the region that will create
below these projects are delayed. The The gas supplied by ONGC was surplus power.
commercial operation of these two of inferior quality and contained
projects would make an additional impurities. This resulted in damage The ultra-mega transmission project
1,475MW of power available to the to the booster compressor and the in the Purnia Bihar Sharif segment
region, which could not only solve the unit had to be shut down. Two out of has been completed. It is important
immediate problem at hand but could three booster compressors have been that the Purnia-Siliguri-Bongaigaon
actually create a power surplus in the damaged and sent to BHEL for repairs. segment be completed urgently.
region. The project developer has cited
There is still some uncertainty security concerns for delay in the
4.4.1.1. Bongaigaon Thermal regarding the quality of gas. In the implementation of this project.
Power Plant event the quality of gas continues Necessary security cover needs to be
to be poor, there is no clarity as to provided to ensure early completion of
NTPC is implementing the 3x250MW whether ONGC or OTPC will install the project.
Bongaigaon Thermal Power Project the required filtration and cleaning
in Assam. Investment approval to machinery.
the project was accorded in January
2008 and work for the main plant was
Gateway to the ASEAN 35
4.4.3. Available potential in Total identified potential Capacity yet to be developed
the region
Meghalaya,
2,394, Meghalaya,
The whole region is endowed with 4% 2,394, 93.78% 92.67%
4% 93.78% 91.12%
various perennial rivers and water 92.67% 91.12%
Others,
bodies, which have enormous 6,249, Others, 80.98%
80.98%
6,249,
hydroelectricity potential. Exploitation Sikkim, 10%
4,286, Sikkim, 10%
of the large hydropower potential 7% 4,286,
7%
in the north east region could be
used for export to the power-deficit Arunachal
Arunachal
Pradesh,
northern and western regions of the 50,328, Pradesh,
50,328,
country. The spill-over benefits for 79%
79%
Meghalaya Arunachal
Meghalaya
Pradesh
Sikkim
Arunachal
Others
Sikkim Others
the region would be the development Pradesh
36 PwC - FICCI
The following power projects are 4.4.4. Key challenges and evacuation of Kameng (600MW)
planned for commissioning by 2022 in way forward power was estimated at 1,100 crore
Arunachal Pradesh: INR, about 50% of the cost of the
R&R issues: Land acquisition in the generation project. Further, this
Project Project size (MW) north eastern region is difficult due region suffers from difficult terrain
Pare 110 to inaccurate or incomplete data of and hostile weather coupled with
land ownership and resettlement lack of qualified manpower. This
Kameng 600 issue of native people dependent has led to inadequate development
Subansiri Lower 2,000 on land and forests. The central of transmission and distribution
and state governments will have (T&D) system facilities in the north
Demwe Lower 1,750
to conceptualise and execute a eastern states, adversely affecting
Dibbin 120 sustainable resettlement option the reliability of power supply to
Siang Lower 2,700 which can be funded by the project the consumers. To overcome this
developers. issue, the union government can
Nyamjunchhu 780 provide a centrally sponsored
Tawang-I 600
Environmental concerns: Obtaining scheme to support inter-state
clearances from the Ministry of and intra-state transmission and
Tawang-II 800 Environment and Forests (MoEF) distribution projects. Further,
Londa (Talong) 225 has become a major issue in the state governments may provide
recent past and this particularly incentives to develop T&D system.
Nafra 120
applies to the north eastern region,
Tato-II 700 with its rich biodiversity. The state Riparian issues: Most of the river
Dardu 60
government and the Ministry of systems of the north eastern region
Power should see to it that genuine are transnational. For example,
Mago Chhu 96 cases get faster clearance from the the Brahmaputra river originates
Par 65 MoEF. in Tibet, flows into India and
empties into the Bay of Bengal
Rego 141 Physical infrastructure: Power after traversing Bangladesh.
Dinchang 90 projects require massive Lack of proper agreements and
infrastructure backing, especially disputes on water sharing, inhibit
Nyukcha Rong Chhu 96
roads to transport heavy equipment the utilisation of its full potential.
11,053 and helicopters to transport smaller Also, state border issues such as in
equipment, particularly for small the case of Subansiri are delaying
Assuming a capital investment hydro plants. In the prioritisation of project development. The central
of 4 crore INR per MW, these roads and highway development in government, in consultation with
developments will require a total the north eastern region, and in the the state governments could put
investment of about 45,000 crore deployment of helicopters, power in place a mechanism to resolve
INR. Apart from these projects, the sector requirements need further outstanding border and share
development of another 10,000MW prioritisation. allocation issues. International
need to be taken up during the next riparian disputes would have to be
five years. The total investment Transmission and distribution: Due
discussed between the governments
required including the additional to scattered demand in the region,
for resolution in a spirit of
10,000MW (till 2027) would be the per unit cost of transmission
cooperation for mutual benefit and
around 100,000 crore INR. in the north eastern region is
satisfactory utilisation of the waters
higher compared to other parts
of the river system.
of the country. For example, the
associated transmission system for
Current deficit can be overcome through Evacuation of surplus power will become Surplus power can be exported in ex-
short-term buying. possible. change for gas.
38 PwC - FICCI
Summary of the required investment
Summary of the investment (crore INR)
Roadways
(only for
the proposed
core Inland water Development Border
State networks) Railways transport* Airports nodes Power townships
Arunachal
20,815 43,926 2,250 350 100,000 1,648
Pradesh
policy
of international relations will and
should continue at the highest levels
to foster better working relations with
neighbouring countries, some amount
initiatives
of interaction with them particularly
the adjoining provinces should be
made at the local level in the interest
of operational ease. The following
initiatives are proposed to facilitate
such local level interactions.
Posting Ministry of External Affairs
officials in each state that has
international borders
Posting Ministry of Commerce and
Industry officials in each state that
has international borders
5.2. Facilitating border
trade
In order to facilitate border trade
with the neighbouring countries, the
following policy initiatives need to be
taken immediately:
Reserve Bank of India regulations
should be reviewed to make them
practicable and trade facilitative
Integrated Check Posts could be set
up in all the border townships.
Paperwork should be simplified and the central government. A superior 5.6. Exchange rate reforms
traders at the border trade centres product can be selected from each
In the absence of a realistic exchange
should be made familiar with the district and branded and provided
rate, growth of exports to Myanmar
paperwork. local and international platform for
has suffered. The official exchange
Adequate banking facilities should promotion of these products. These
rate of Myanmars currency kyat is
be available at the border trade activities will also have a spill-over
hugely inflated. One kyat is equal to
centres. effect on the tourism industry. 8.50 INR (2010). However, in the
Promote development of border 5.4. Capacity building informal market the rate is 25 to 30
haats and upgrade the Land Kyat for a rupee. The Indian rupee is
Improve access to education
Custom Stations to ICPs. generally used in the informal trade
to the population and reduce
between India and Myanmar. Hence, it
Revisit the Border Trade Agreement disparities between urban and
is recommended that India-Myanmar
with Myanmar and substantially rural areas in access to educational
trade be denominated in rupees.
increase the list of tradable items infrastructure.
Advantages of using rupees are listed
through barter system. The Indian Provide quality higher education below.
government may allow normal and strengthen technical education
trade between the two countries as It will help avoid the use of foreign
and vocational training.
per the foreign trade policy. currency and hence avoid complex
Promote partnership between procedures, considerable delays
5.3. Supporting educational institutes and and increase in transaction costs.
local businesses and industries with the objective of
The rupee has been relatively
entrepreneurs improving labour force skills and
stable than the euro, which is
enhancement of research and
Financial and administrative currently used for the settlement
development.
support should be provided to of India-Myanmar trade. Trading
local entrepreneurs, especially for Introduce a policy for promoting in rupee will help both traders and
marketing. innovation. consumers on both sides of the
border.
Efforts should be made to promote 5.5. Tax reforms
innovation. The use of the rupee will encourage
Aligning tax policies with those of
traders involved in the informal
Artisans and the handicraft other AEAN countries will help make
trade to go through the formal
industry need to be promoted investments equally attractive in both
through a well-coordinated route.
ASEAN and north east India.
programme with assistance from
About FICCI
FICCI, industries voice for policy change, is the largest and oldest apex oraganization
of Indian business and industry. It is the rallying point for free enterprises in India. It
has empowered Indian business in changing time to shore up their competitiveness and
enhance their global reach. With a nationwide membership of over 1500 corporate and
over 500 Chambers of Commerce and business associations, FICCI espouses the shared
vision of Indian business and speaks directly and indirectly for over 2,50,000 business
units. FICCI maintains the lead as the proactive business solution provider through
research, interactions at the highest political level and global networking.
Some of the focus areas for the North East Advisory Council are
1. Infrastructure Development
2. Energy
3. Development of the Power Sector
4. Promoting the North East as a destination for Investments and Tourism
5. Enhancing competitiveness of local industry in sectors like Tourism like Food
Processing,
6. Skill Development
Apart from this the council is working on a comprehesive vision to position the NE as
a bridge between ASEAN and India. The council has also taken up a number of issues
affecting local industry and recommended steps for strengthening the North East
Industrial and Investment Promotion Policy.
Contacts
Biswajit Chakrabarty
Head FICCI North East
Phone: (0361) 273 3010
Email: biswajit.chakrabarty@ficci.com
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Contacts
Manish R Sharma Manish B Agarwal
Partner, PwC India Partner, Leader - Capital Projects &
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