north-east-can-be-a-window-for-service-exports

Context

  • The ‘Look East’ policy of 1991 gave way to the ‘Act East’ policy” of 2015. 

Background

  • In contrast to global experiences, the border districts in South Asia tend to lag behind others, especially in the East. 
  • There is a vast amount of literature to show that transport and connectivity are among the major challenges to improving trade ties in the East, especially the chicken neck area in the Siliguri corridor. 
    • This corridor falls in the North Bengal region of West Bengal.
  • Several of the districts in the region, which border Bangladesh, Bhutan and Nepal, had been classified as “backward” by the erstwhile Planning Commission.

About Act East Policy

  • The ‘Act East Policy’ announced in November, 2014 is the upgrade of the “Look East Policy”.
  • It is a diplomatic initiative to promote economic, strategic and cultural relations with the vast Asia-Pacific region at different levels.
  • It involves intensive and continuous engagement with Southeast Asian countries in the field of connectivity, trade, culture, defence and people-to-people-contact at bilateral, regional and multilateral levels.
  • Objectives: To promote economic cooperation, cultural ties and strategic relationships with countries in the Asia-Pacific region. 
    • This would involve providing enhanced connectivity to India’s North Eastern Region (NER) with our bordering countries.

Key Services under ‘Act East Policy’

  • The ‘Act East’ policy has led to infrastructural investment and signing of agreements in transport, power, etc. 
  • The focus here is on the potential of the services sector in North Bengal and NER. 
  • Producer services: Each of the border districts must develop a perspective plan identifying their comparative advantages and sync them with schemes like District Export Hubs and One District One Product. 
    • Scaling up of key sectors will require significant enhancement of what economic literature calls ‘producer service’ sectors, which include management services, research and development, financial and accounting services, and marketing.
  • Financial services: Barring Sikkim, the NER lags behind in terms of financial inclusion (NCAER DBT Research). 
    • The sector can spur regional growth and it has both efficiency and equity implications. The innovations from the fintech sector can be another line of export.
  • ICT connectivity: The nature of this sector is similar to financial services. Poor connectivity plagues the NER, which is largely due to its geographical terrain (NCAER DBT Research). 
    • If India can tap into Bangladesh’s submarine cable networks, then a combination of optical fibre, satellite and microwave technologies could be used to provide digital connectivity in NER. Cooperation, trade and innovations in this area will also help our neighbours.
  • Tea and bamboo: Eighty-one percent of Indian tea is produced in Assam and West Bengal. The most significant product of the North Bengal economy is tea.
    • NCAER research on border tea trade in North Bengal shows that Nepal and Bangladesh also provide competition to Indian tea producers. 
    • However, India’s tea infrastructure and regulations are far superior to those of its neighbours.
  • Tourism: Improved connectivity will boost tourism in this region. The natural beauty combined with its religious and historical sites can spur tourism.
    • NCAER research has found that Nepali citizens living in border regions come to Siliguri for shopping. 
    • Day trips for shopping/picnicking from neighbouring countries could be encouraged and monetised. 
    • Both short and long trips can generate foreign revenue. The border haats between India and Bangladesh must be enhanced.
  • Education: The NCAER has found that the share of educational services in Darjeeling district, West Bengal, is relatively large. It houses good quality boarding schools, which can attract international students from bordering districts, with spillovers in tourism.
    • Similarly, other districts could identify their respective comparative advantage. Higher education, especially through research institutes and edtech companies, could be another potential area of service exports. 
    • Same languages being spoken in districts across neighbouring international borders may be an enabling factor.
  • Logistics: The current infrastructural investment will boost demand for logistics services. India is developing several airports in the region. Bagdogra airport, Darjeeling, is the only international airport in North Bengal, and it is close to many districts in Bangladesh and Nepal. 
    • There are plans to expand this airport, and it could potentially cater to passengers from neighbouring countries.

Initiatives to Enhance Connectivity:

  • Agartala-Akhaura Rail Link between India and Bangladesh.
  • Intermodal transport linkages and inland waterways through Bangladesh.
  • Kaladan Multimodal Transit Transport Project and the Trilateral Highway Project connecting the North East with Myanmar and Thailand.
  • Under India-Japan Act East Forum, projects such as Road and Bridges and modernization of Hydro-electric power projects have been undertaken.
    • India-Japan Act East Forum was established in 2017 which aims to provide a platform for India-Japan collaboration under the rubric of India’s "Act East Policy” and Japan’s "Free and Open Indo-Pacific Strategy”.
    • The Forum will identify specific projects for economic modernization of India’s North-East region including those pertaining to connectivity, developmental infrastructure, industrial linkages as well as people-to-people contacts through tourism, culture and sports-related activities.

Other Initiatives:

  • Assistance extended in the form of medicines/medical supplies to ASEAN countries during the pandemic.
  • Scholarships with offers of 1000 PhD fellowships have been offered at IITs for ASEAN countries participants.
  • India is also implementing Quick Impact Projects in Cambodia, Laos, Myanmar and Vietnam to provide development assistance to grass-root level communities in the fields of education, water resources, health etc.
    • Quick Impact Projects (QIPs) are small-scale, low cost projects that are planned and implemented within a short timeframe.

Mains Question

Recent developments in the North Eastern Region are testing Indian diplomacy and Act East Policy in the Southeast Asian region. Discuss. Also discuss how it helps India’s Softpower. (250 words)

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