The North-Eastern Region (NER) of India has great economic potential. It has large deposits of oil, natural gas, coal, and limestone, and a sizable proportion of land under cultivation for agro-horticulture products, tea, bamboo, and rubber. The region shares its border with the south Asian countries, and its geographic proximity to South East Asia makes it a pivot to implement India’s Act East policy. However, NER has yet to function as a hub connecting India to the rest of the world. However, despite its rich natural capital, strategic position, and government intervention, NER contributes only 2.8 per cent to the nation’s GDP, with the secondary sector contributing just about 18 per cent of the state’s income. Challenging terrains, limited connectivity, and an inadequate business ecosystem are among the main causes for low private investments and poor industrial infrastructure in the region; thereby leveraging its natural proximity with the wider Asian region. Individual states in NER suffer from a lack of scale economies and manpower skills, leaving them as economic laggards vis-à-vis the rest of India. Asian Development Bank has conducted a study on the North East Economic Corridor Study involving multiple sectors across NER in 2020 including roads, rail, waterways, airport, agriculture & allied activities, food processing, bamboo, oil & gas, tourism, urban development, power and trade facilitation. The study emphasised infrastructure development on transport, urban, and energy, as enablers for equitable economic development for India's northeastern region. The recommendation envisaged a multi model transport connectivity 1. Within India's northeastern region; 2. Between the northeastern region and the rest of India with an additional route through Bangladesh; and 3. With neighbouring countries, including Bangladesh, Bhutan, and Myanmar, to enhance South Asia-Southeast Asia connectivity The study has identified an investment potential of over Rs two trillion across the sector in 24 growth centres and 20 border centres in the NER. This can be achieved through both public and private investment. Currently, with stable government, the states are also working to improve the business environment in the NER by streamlining the regulatory process and providing various financial incentives to investors. Potential in the oil and gas sector The oil and gas sector in the NER is undergoing significant expansion. The Numaligarh refinery is being expanded from 3 MMTPA to 9 MMTPA, which is expected to be completed by 2029. This will open up new opportunities for downstream petrochemical industries, such as lubricants, pharmaceuticals, pesticides, and other chemicals. To ensure the availability of crude oil at Numaligarh, a 1600 km pipeline is being constructed from Paradeep port to Numaligarh. In addition, NRL is commissioning a 2G bioethanol plant with a capacity of 49,000 MT/year with bi-products of acetic acid (11000 MT/year), furfural and furfuryl alcohol (31600 MT/Year) and liquid CO2 which also can be consumed by downstream industries. This plant uses bamboo as a feedstock, and there is significant potential for investment in bamboo cultivation and primary processing centres in the NER. Brahmaputra Cracker and Polymer Ltd (BCPL) in Dibrugarh has great potential for downstream industries that use polyethylene (LLDPE & HDPE) and polypropylene as raw materials. BCPL has a 280,000 TPA cracker unit and downstream polymer units that produce 220,000 TPA of polyethylene and 60,000 TPA of polypropylene. Assam Petrochemicals Ltd (APL) is adding a 500 TPD methanol plant to its existing 100 TPD plant. Methanol is a key ingredient for the production of acetic acid and formaldehyde, and it is in high demand both domestically and internationally. APL is currently transporting methanol to West Bengal, UP, Bihar, Haryana, Nepal, Bangladesh, Gujarat, and Maharashtra. Overall, the oil and gas sector in the NER offers a number of investment opportunities in downstream petrochemical industries, bamboo cultivation and primary processing, and industries that use polyethylene and polypropylene as raw materials. The budding logistics sector PM Gati Shakti is a remarkable initiative, as it aims to drive down logistics costs in India by streamlining and integrating infrastructure projects of various Central and State governments. Through this breakthrough master plan, major projects across sectors like petroleum, railways, highways, utilities etc. will share a unified vision for accelerated and efficient execution. NER has the main bottleneck in terms of logistics infrastructure like connectivity, storage among the production cluster and how cost-effectively the products can be taken to the consumer market. So even if with great availability of raw materials within NER for developing processing capacity within the region, the issue has been always the transportation cost or even access to any kind of logistics infrastructure which makes the product unviable for the market. The Jogighopa Multi-Modal Logistics Hub (MMLP) is a major new development that will help to address these challenges. The MMLP will have all modes of transport, including road, rail, and inland water. It will function as a hub for cargo movement for the entire NER. The Government of Assam is also planning to set up one more logistics hub in Silchar which also connects Bangladesh through National Waterway-16. Inland water transport has huge potential to reduce logistics costs compared to road or rail. The Ministry of Shipping, Ports and Waterways is giving great emphasis to maintaining and developing inland waterways in the region through Brahmaputra (National Waterways -2) which eventually connect NER to the Indo-Bangladesh protocol routes. The Inland Waterways Authority of India (IWAI) is constructing three river ports in Dhubri, Jogighopa, and Dibrugarh. IWAI has also acquired land in the Jogighopa MMLP to set up a container terminal and river port structure. Recently, NRL and IWAI have signed an MOU for the use of the IWAI route from Jogighopa for the transportation of fuel on August 24, 2023. Source: IWAI With the opening up of the inland waterway’s routes and cargo movement through inland waterways including the proposed MMLPs, there is a great potential for the logistics companies to invest in the region to build the required infrastructure to enable the production houses to reach the larger markets. There is also potential for waterway vessel construction, maintenance, terminal operation, cruise operation etc. by the private sector. Prospects in the tourism sector The North-Eastern Region (NER) of India is a treasure trove of natural beauty and cultural diversity, with immense potential for tourism development. However, the sector remains largely untapped due to a lack of infrastructure and promotion. States like Sikkim, Arunachal Pradesh, and Meghalaya offer stunning natural landscapes, from the snow-capped Himalayas to the lush rainforests. The region is also home to a rich cultural heritage, with diverse tribes and communities each with its own unique traditions. Rural tourism has great potential in the NER, with its picturesque villages and unspoiled natural surroundings. However, the lack of last-mile connectivity and basic amenities makes it difficult for tourists to reach and explore these areas. The NEEC study has identified state-specific tourism sectors with high potential, such as ecotourism, adventure tourism, and cultural tourism. The region is also well-positioned to benefit from the growing trend of experiential tourism. There is a significant need for investment in the NER tourism sector, particularly in good hotels, adventure tourism activities, and tourism circuit development. The government has taken keen interest in developing tourism infrastructure in the NER through schemes like “Swadesh Darshan” However, more needs to be done to attract private investment and make the NER a more attractive tourist destination. Potential in other sectors Investment in infrastructure in the NE region is mainly through central sector funding and through multilateral development banks. The states have limited resources to mobilise funding for major infrastructure projects. The NER has immense potential for private sector investment in sub-sectors like public water supply, wastewater, waste management, urban transport, industrial parks, post-harvest management, renewable energy, affordable housing etc. subject to intervention required by the government in the following areas: The NER states need to have adequate regulatory or policy frameworks to attract private investment. The states need to develop viable projects for private investment including provision of Viability Gap Funding (VGF), where project revenues are not sufficient to maintain cash flows. Focus on sector-specific structured project development including ensuring a timely approval process for project-related activities. Conclusion The North-Eastern Region (NER) of India has great economic potential to contribute towards India’s vision of a $ 5 trillion economy, but it has not been fully realised due to a number of challenges, including limited connectivity, an inadequate business ecosystem, and a lack of scale of economies and manpower skills. The NER is a strategic region for India, and its development is essential for the overall development of the country. Private investment is crucial and pivotal for the economic development of any region and in order to attract private investment to the NER, the government needs to take steps of adequate regulatory and policy frameworks and a positive business environment for the private sector to invest more in the region at the same time invest more in the basic public infrastructure. A public-private partnership model can unlock the NER's real economic potential and create employment for its people. Reference: 1 - https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1907723 About the author: Anjan K Sarma is currently engaged as a Consultant (Project Development) with Project Development Unit of the Asian Development Bank (ADB), India resident Mission. He is an independent consultant having over 17 years of experience as an infrastructure development working with financial management, revenue restructuring, PPP, institutional development, infrastructure planning & feasibility studies, development economics, etc working with multilateral development banks, national and state governments.