India's Northeast - EconReads

The economies of India's eight northeastern states, their geographic isolation, natural resources and the Act East push to connect them with Southeast Asia.

India’s Northeast comprises eight states: Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim. The region is rich in natural resources and cultural diversity but has faced economic challenges.

Geography

The Northeast is connected to the rest of India only by a narrow strip of land, about 20 to 22 kilometres wide at its narrowest, called the Siliguri Corridor or “Chicken’s Neck”. Most of the region’s borders are international, with China, Bhutan, Myanmar and Bangladesh. Before partition in 1947, the region’s trade flowed through what is now Bangladesh, especially to the port of Chittagong. Partition cut these links, isolating the region.

Economy

Tea: Assam is one of the world’s largest tea-producing regions.
Oil and gas: Assam has India’s oldest oil fields, at Digboi, where oil was struck in 1889.
Hydropower potential in Arunachal Pradesh.
Bamboo, horticulture and organic farming: Sikkim became India’s first fully organic state in 2016.
Tourism based on natural beauty and culture.

Challenges

Connectivity: hilly terrain and distance raise transport costs.
Insurgency and conflict in some areas historically, and ethnic violence in Manipur since 2023.
Limited industry and private investment.
Dependence on central government transfers.

Act East

India’s Act East Policy, announced in 2014 as an upgrade of the earlier Look East Policy, aims to strengthen ties with Southeast Asia, with the Northeast as a gateway. Projects include the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project through Myanmar, though progress has been slowed by conflict in Myanmar. Better railway, road and air connections within the region have also expanded.

The long way to the sea

Before 1947, tea from Assam could travel a short distance to the port of Chittagong. After partition, it had to travel a much longer route through the Siliguri Corridor to Kolkata. Transport costs rose, and the region became economically isolated. Agreements allowing transit through Bangladesh aim to restore some of these shorter routes.

Thinking the Northeast is one uniform region

The eight states have very different geographies, economies, languages and cultures, from Assam's tea and oil to Sikkim's organic farming and tourism.

Key takeaways

India's Northeast has eight states linked to the rest of India by the narrow Siliguri Corridor.
Partition in 1947 cut its trade routes through present-day Bangladesh.
Tea, oil, hydropower potential, horticulture and tourism are key resources.
The Act East Policy aims to connect the region with Southeast Asia.