Strengthening Synergies in Trade and Investment Relations
Since the early 1990s, India's foreign policy has emphasized strengthening economic and strategic engagement with its eastern neighbors.
The ‘Look East Policy’ of 1992, elevated to the ‘Act East Policy’ in 2014, marked a significant shift in India's outreach to Southeast and East Asia.
Through these policies, several institutional frameworks have been established to deepen India's economic ties, resulting in notable growth in trade and investment with ASEAN, Bangladesh, Bhutan, and Nepal.
However, despite these gains, persistent challenges in connectivity, logistics, trade procedures, and infrastructure continue to limit the full realization of trade and investment potential.
India's NER region stands out as a strategically vital area, offering immense opportunities for trade with East and Southeast Asia.
With its abundant natural resources—ranging from oil, natural gas, and coal to limestone and fertile agricultural land—the region holds vast untapped potential.
Over the past two decades, the NER has witnessed impressive growth, averaging 8 percent annually, with key sectors such as petrochemicals, renewable energy, and manufacturing showing robust promise.
The region already exports products like cumin seeds, cotton yarn, and car components, while also importing essential goods from Southeast Asia, including betel nuts, dried ginger, and turmeric roots.
Given the region’s favorable climate, particularly for agricultural commodities, there is significant potential to scale up exports, especially in organic and fresh produce.
Sectors like medical tourism and financial services further offer unexplored avenues for growth.
Despite these prospects, several obstacles persist. Only a small fraction of India’s trade with East and Southeast Asia originates from the NER, whereas 95 percent of trade comes from other parts of the country, according to NITI Aayog.
The region’s share of India’s overall trade remains low, and a significant portion of its goods is routed through ports outside the NER, highlighting the critical need for improved infrastructure and more efficient cross-border trade processes.
Low foreign direct investment (FDI) inflows into the region, especially when compared to states like Delhi and Mumbai, further exacerbate these challenges.
Additionally, there is a need for greater efforts to raise awareness about the NER’s unique products and identify key markets in Southeast Asia for these goods.
Against this backdrop, this session will explore the untapped trade potential of North-East India and its pivotal role in enhancing India's economic ties with East and Southeast Asia.
It will assess existing barriers to trade and investment in the region and outline actionable strategies to overcome these hurdles.
To harness trade as a robust engine of growth, it is crucial to deepen integration with regional value chains (RVCs) and global value chains (GVCs), alongside boosting exports of finished goods.
Effective integration into GVCs not only enhances export potential but also creates job opportunities, spurring economic growth and improving employment outcomes.
It is essential to align the supply base of the region with the evolving patterns of global demand.
For instance, while India is among the world's top producers of fruits and vegetables, its share in global fruit exports remains a modest 0.5 percent.
Leveraging India's organic production potential could position the country as a major global player in fresh fruit and vegetable exports.
A significant initiative in this direction is the Mission Organic Value Chain Development for North Eastern Region (MOVCDNER), launched in 2016 by the Government of India.
The scheme aims to promote organic farming across the Northeast by transitioning traditional practices into sustainable organic enterprises.
It also envisions developing organic parks for specific commodities and establishing agencies to oversee the entire value chain, fostering sustainable agriculture and raising farmers' incomes.
Cross-border value chains offer significant potential for creating win-win scenarios for both the North-eastern region and neighbouring countries such as Bangladesh.
Sharing borders with four North-eastern states, Bangladesh plays a pivotal role in the development of high-impact value chains that could mutually benefit both nations.
Sectors such as fruits and vegetables, spices, bamboo and related products, and medical tourism have been identified as key areas for establishing new value chains and generating employment.
For example, surplus fruit production in the North-east could support Bangladesh's burgeoning food processing industry and help meet the growing food demands of its population.
Additionally, the service sector in the North-east holds immense potential to contribute to India's GDP.
By enhancing linkages with upstream and downstream services within value chains, opportunities in logistics, transportation, post-production marketing, and other areas could be significantly boosted.
By forging reciprocal arrangements and improving connectivity with neighbouring Southeast Asian countries, both parties stand to benefit from expanded value chains and closer economic ties.
This session will focus on identifying opportunities for value chain integration between India’s North-east and its neighbouring countries, especially Bangladesh and Southeast Asia.
It will highlight key sectors with high potential, such as agriculture, agro-processing, bamboo, and services, while also identifying the key constraints that limit the full realization of these value chains.
By addressing these challenges, the session aims to propose actionable solutions to foster stronger regional value chains and drive mutual economic benefits.
Strengthening Multi-Modal Connectivity in North-Eastern Region