India's Northeast: From Periphery to Center?

Until the early 1990s, the economic axis of India was on its western seaboard, on the Arabian Sea. The two ends of this axis were the cities of Mumbai and Ahmedabad. The already industrialized Mumbai region of Maharashtra State was joined by the emerging textile, petrochemical, and engineering firms of the Ahmedabad-Vadodara megalopolis, in India’s Gujarat State, to create India's most dynamic economic corridor. Including an Indian Institute of Technology (IIT) in Mumbai and an Indian Institute of Management (IIM) in Ahmedabad, there were many leading and dynamic educational and research institutions at both ends of this axis to provide top talent to the enterprises of the region.

Then came the information technology (IT) revolution of the late 1990s. Software Technology Parks of India (STPI), established by India’s government almost as a marginal afterthought to a heavy-industry oriented economic policy, turned out to be surprising successes. The new powerhouse economic corridor of India links the southern cities of Hyderabad and Chennai, with Bangalore in the middle ruling as the IT epicenter. An IIT in Chennai, an IIM in Bangalore, and the globally sponsored Indian School of Business (ISB) in Hyderabad joined the established science powerhouse of Indian Institute of Science (IISc) in Bangalore. Along with other elite and mid-range education and research institutions, these created a font of talent for the software and related IT firms of India’s south. If peace can break out between the warring sides of Sri Lanka, then India’s southern axis of technology and industry could stretch to Colombo.

This state of affairs, the current economic and technological dominance of India’s south, may change in the next 10 years. By 2015, the baton of economic leadership may pass to the eastern edge of India. Kolkata in West Bengal state and Guwahati in Assam State are likely to be the new nodes of a powerful economic axis.

The Eastern and Northeast regions of India have been economic and political stepchildren. With Bangladesh – through which India has no economic transit arrangements at the moment – in between India’s remote Northeast and the rest of the country, there is only a sliver of 25-mile wide land corridor that connects the seven far Northeastern states of India to the Eastern “mainland” metropolis of Kolkata. People in the Northeast India are well aware of their predicament as belonging to a “nearly landlocked region”, and talk of “going to India” when they travel to points west. Various insurgencies of the disaffected and the corrupt plague this remote region.

There are, however, conditions in place that could transform India’s northeast. There are IITs at both ends – a new one in Guwahati, on the banks of the mighty Brahmaputra river, and the oldest IIT in Kharagpur near Kolkata. There are many other strong educational and research institutions, especially in Kolkata. There is also an IIM in Kolkata, the oldest IIM in India.

Awareness of this existing but under-tapped educational potential has woken up the West Bengal State government and the global IT industry. Since 2000, Kolkata has become a major destination of IT firms. Global and Indian software firms have opened up development centers in the ample land available on the outskirts of Kolkata.

More importantly, however, some strong geopolitical changes are happening. From a neglected periphery, the Northeast region may become an economic and logistical center of Northeast India and Southeast Asia. Consider the following:

1) On July 8, 2006, after a hiatus of 44 years, the road link between India and China through the 14000-feet high Nathu La pass in Sikkim State of India is being reopened. Siliguri in West Bengal, at the southern edge of Sikkim in India, is already an important railhead. A new railhead is being opened in Lhasa in Tibet, on the Chinese side. The Nathu La link, especially if it can be managed as an all-weather roadway, could revolutionize land-based transport in the Northeast of India and Southwest of China.

2) In anticipation of the growing India-China links via India's Northeast region, the Confederation of Indian Industries (CII) is opening an office in Shanghai, China.

3) South Asian Free Trade Agreement (SAFTA) goes into effect from July 1, 2006. With SAFTA, trade between India and Bangladesh is expected to receive a major boost. To smooth the border crossing procedures, the Petrapole Land Customs Station in West Bengal is being placed under Home Ministry's Land Customs Port Authority.

4) India is undertaking a 3-year project to modernize 13 border trade centers. Of these, 12 are in the Northeast region, including four in West Bengal. Only one – the Attari border post between India and Pakistan – is on India's western border, indicative of the relative political stability of the two sides of India's borders.

5) Electronic Data Interchange (EDI) interfaces are being planned for some of the border crossing points, especially on both sides of the India-Bangladesh border, to facilitate quick clearance of customs documents.

6) India is investing in the development of Setwee port in Myanmar. With road and rail links, this would provide a vital port link for the semi-landlocked Northeast states of India. Eventually, such land and port links could become a gateway between India and ASEAN.

7) Because of their remoteness and disaffection with the rest of India, many of the small states in India’s Northeast are also some of the most westernized. For example Shillong, the capital of tiny Meghalaya State, can boast of being home to a large number of high-quality rock bands. Such pockets of westernization could provide easy cultural bridges to similar pockets in the ASEAN region.

Will the projected economic changes happen and could there be dramatic transformations in India's Eastern and Northeastern states? No one has a crystal ball. We can only learn from historical analogs.

In the 1970s, no one would have foreseen that the sleepy and temperate cantonment town of Bangalore – a place where people traveled for rest and recuperation – would become the world's largest software center.

While not opaque, the future is translucent as best. The various forces set in motion in India's Northeast and East do imply one thing, however. From now on, all those interested in the global economy need to watch the Northeastern and Eastern region of India with care, not just as a potential economic axis within India but also as a likely economic hub of Asia. The Kolkata-Guwahati axis has the potential to evolve into a thriving linchpin between India, China, parts of South Asia, and ASEAN.