Gateway to ASEAN: Government plans to make Northeast India into a strategic export hub
The Indian government is pushing a new strategy to transform the North Eastern region into a key export hub for Bangladesh and the Association of Southeast Asian Nations (ASEAN). This initiative comes alongside ongoing negotiations to improve India’s free trade agreement with the 10-member ASEAN bloc.
The government’s multifaceted strategy focuses on improving trade ties with ASEAN nations and enhancing the region’s economic prospects. The landlocked North Eastern states, bordering Myanmar, Bhutan, and Bangladesh, are seen as having immense potential for trade due to their geographic location.
The renegotiation of the ASEAN-India Trade in Goods Agreement (AITIGA) stands as a pivotal step in this endeavor. The aim is to address unfavorable clauses that have led to a surge in the influx of low-quality Chinese goods.
By rectifying the shortcomings of the existing trade agreement, India aims to strengthen the economy of the northeastern states significantly. Presently, the portion of India’s exports to ASEAN contributed by the region is minimal, amounting to less than USD 10 million of the total USD 44 billion recorded in 2022-23.
The hastily signed FTA with ASEAN in 2009 exacerbated India’s trade deficit, primarily due to inadequate provisions for rules of origin. During 2022-23, India’s trade deficit with ASEAN soared to $43.6 billion, highlighting the urgency for a revised agreement.
In today’s world, connecting regions, making trade easier, and working together are crucial for growing economies. The northeastern region’s position makes it a good place for trade with ASEAN countries and others.
The government’s focus on developing infrastructure, including special economic zones and transportation networks, is pivotal in harnessing the region’s potential.
Creating a transport network that combines roads, railways, water routes, and air travel is essential for smooth transportation of goods. The North Eastern region of India currently faces high transportation expenses. To reduce costs and improve delivery speed, it’s crucial to develop competitive logistics and enhance the efficiency of transportation. This not only encourages neighboring countries to utilize North East’s export services more but also boosts the country’s export capabilities and attracts foreign investment.
Japan’s involvement in enhancing connectivity and infrastructure underscores the global interest in the region’s economic development. The Act East Forum, spearheaded by India and Japan, serves as a platform for driving collaborative initiatives aimed at fostering regional integration.
This strategy could prove beneficial for various sectors. Fresh fruits and vegetables, a focus area for the Commerce Ministry, could be efficiently exported to the US and EU as well, leveraging the North Eastern hub’s potential.
The fourth round of talks on renegotiating the ASEAN-India Trade in Goods Agreement (AITIGA) is scheduled for May 7-9 in Kuala Lumpur. While details of the specific plan haven’t been unveiled, the government’s focus on this region signifies a shift towards boosting trade ties with its eastern neighbors.
