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N-E India: small, but with great prospects ahead

N-E India: small, but with great prospects ahead
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First Published: Mon, Aug 31 2009. 10 48 PM IST

Updated: Mon, Aug 31 2009. 10 48 PM IST
States in the North-East (Assam, Arunachal Pradesh, Meghalaya, Mizoram, Manipur, Nagaland and Tripura, and we also include Sikkim) have not been typically at the top of the mind of marketing professionals. But this is about to change. The region has been grappling with problems of geography and ethnicity for many years, but with liberalization and technology, high economic growth has been unleashed in the region as well. Steadily, this region is moving into the national spotlight, with some states performing better than the national average both in terms of economic growth as well as socio-economic progress.
Also See On the path of progress (Graphics)
While markets in the North-East are much smaller than other regions in India, this region has been attracting interest recently as communication and transportation links improve. Its economic structure is also changing. The region has traditionally been more primary sector dependent than the rest of the country—but this will change rapidly in the coming years. The Union government has been trying to build a stronger manufacturing base in the area, but its distance from demand centres in the rest of country and the lack of close access to a port have been impediments.
Investment has been coming in on various fronts in recent years. Nagaland is all set to have the North-East’s first special economic zone (though it is unlikely to be a major success), an agro-processing complex that will build on the state’s remarkable agricultural and horticultural achievements in recent years. Last April, the biggest steel plant in the North-East started operations in Tripura, while JSW Steel Ltd is expanding retail outlets all over the region as well. Meanwhile, Meghalaya has become a cement production hub as its limestone deposits have attracted cement manufacturers, thanks to the latest boom in construction. The Asian Development Bank (ADB) recently put up a $200 million (Rs978 crore) loan for improving basic infrastructure in the capitals of these states—the first time that ADB has shown interest in this region.
The North-East is a large region, but constitutes a small share of total consumption expenditure. Its largest and most important cities tend to be capitals that have been built and sustained through government expenditure, much of it flowing from the Centre. Given the low population density and topography, consumer markets are scattered and small in size. Only two cities make it to India’s top cities in market size—Guwahati at rank 53 and Agartala at rank 97.
Of the other major cities, Shillong and Imphal have expenditures of less than Rs2,000 crore, and Aizawl, Itanagar, Kohima and Gangtok all have market size of less than Rs1,000 crore. These are not large markets yet, but they will grow steadily. There are many reasons for that. First, the region’s strategic location makes it imperative for the Indian government to develop it as a major hub. It is at the centre of a triangle formed by large markets in the rest of India, southern China and South-East Asia. It is only a matter of time before Bangladesh and Myanmar will allow transportation networks to West Bengal, South-East Asia and the Bay of Bengal.
Moreover, the aspirations of the youth in the region, like in the rest of the country, are oriented towards joining the international mainstream. Already, the region’s educational attainments surpass those of many economically advanced states of India. Many more higher education and professional institutions are being set up, and quality centres of higher learning are now not just limited to Shillong.
Graphics by Ahmed Raza Khan / Mint
Demand Curve is a weekly column by research firm Indicus Analytics Pvt. Ltd on consumer trends and markets. Your comments are welcome at demandcurve@livemint.com
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First Published: Mon, Aug 31 2009. 10 48 PM IST