KOLKATA, December 13, 2019: India can unleash the economic potential of its North Eastern Region (NER) by focusing on reforms that will boost the region’s participation in regional and Global Value Chains, say new World Bank Reports.
Highlighting northeast’s comparative strengths in agriculture and services, the report, Playing to Strengths: A Policy Framework for Mainstreaming Northeast India, emphasizes that NER, despite its low manufacturing base, can leverage those strengths for higher growth. Taking that argument forward, the companion report, Strengthening Cross border Value Chains: Opportunities for India and Bangladesh, has identified four sectors, among many other promising ones, where new value chains can help boost the region’s export potential, while also creating more and better jobs for the people. These include fruits and vegetables, spices, bamboo and related products, and medical tourism.
“Over the past decade, connectivity agreements with Bangladesh and a spurt in infrastructure investments are increasing the north east region’s economic integration. Together, these developments can help for the people of the north east region,” said Junaid Ahmad, World Bank Country Director in India.
The report calls for reorienting northeast region’s supply base to serve the changing global demand. Today, India is a leading global producer of fruits and vegetables, accounting for 11 percent of global production. Yet, its fruit exports form only 0.5 percent of global fruit exports. The northeast, with its strengths in organic and near-organic production, can play a significant role in India’s quest to become a global player in fresh fruits and vegetables, especially in the context of changing consumer preferences.
“The north east region can capitalize on rising demand for fresh fruits and vegetables, and for fresh, high-quality spices, especially those produced in an environmentally friendly and socially responsible manner. It can promote bamboo, an environment friendly resource. It can encourage nature-based tourism, as well as trade in medical and education services,” said Sanjay Kathuria, Lead Economist, World Bank and co-author of the reports.
Cross-border value chains can create win-win opportunities for Northeast and Bangladesh
Bangladesh, which shares a border with four of the eight NER states, is very well placed to play a critical role in developing high-impact value chains for the region that will also bring gains to consumers and firms in Bangladesh, the report suggests
For example, the region has 53 percent marketable surplus in fruit production that can provide inputs for Bangladesh’s vibrant food-processing industry, while processed foods can be exported to northeast and beyond. In fact, Bangladeshi firms can secure a steady supply of inputs to meet the food requirements of its growing population by investing in northeast region’s farm sector. Such cross-border value chains in horticultural products like fruits, vegetables and spices have the potential to increase formal exports and reduce the significant volume of informal exports. For example, NER has an insignificant share in Bangladesh’s formal imports of fruits, vegetables and spices, worth over $1 billion.
The reports suggest tapping the potential of this sector for the northeast, for example in medical tourism, where Bangladesh is an important market for India. .
What’s more, . At the same time, northeast value chains can create business opportunities for Bangladeshi logistics providers such as transporters, and providers of port services.
According to the reports, reciprocal arrangements and use of emerging corridors that connect northeast region with neighboring countries can serve as a win-win for all. It can allow Bangladeshi firms easier access to markets for sourcing inputs or selling products in the Bangladesh, Bhutan, India, Nepal (BBIN) region, Myanmar and beyond.
In fact, for greater efficiency gains, the reports suggest, governments should consider allowing vehicles from both countries to cross borders, doing away with the need for transshipment of goods at the border, and opening up the logistics services market in the northeast region to both Bangladeshi and Indian operators.
In conclusion, Priya Mathur, co-author of the reports, added: “NER could consider launching a ‘Brand North East’ that plays to its strengths, emphasizing elements such as healthy living, environmental sustainability, social responsibility, and service-orientation.”