Located in north-eastern India, Assam is one of the fastest-growing states in the country, lying at the heart of India’s Act East Policy. Spread over 78,000 square kilometres, it is fast becoming India’s expressway to Southeast Asia.
Due in part to its strategic location, Assam is now looking to attract investors from the Association of Southeast Asian Nations (ASEAN) to fuel its development. In fact, the state is located closer to several major Southeast Asian cities in Vietnam, Thailand and Myanmar, compared to Indian development hubs like Bengaluru and Chennai.
Previously overlooked, Assam has now received priority in terms of development from the administration of Indian prime minister, Narendra Modi, who seeks to bolster closer relations with his ASEAN counterparts. This comes under his Act East Policy, which envisions increased people-to-people ties, strengthening of trade relations and strong cultural ties between India and ASEAN.
Selling Assam to ASEAN investors
Assam’s main selling point is its emerging local economy, which is rapidly undergoing industrialisation. According to official data, Assam’s economy grew at an astounding compound annual growth rate (CAGR) of 13 percent between 2005 and 2015.
Its main economic sectors include petrochemicals, oil and gas, energy, tourism, food processing and river transport, among others. The state also boasts credible institutions of higher learning, developing urban centres and a business-friendly state government.
One of the main economic sectors in Assam is oil and gas. In India, it is the third-largest producer of petroleum and natural gas. The region contains over 18 percent of the country’s hydrocarbon resources, with upwards of 1.6 billion tonnes of crude oil and 158.7 billion cubic metres of natural gas reserves. Besides that, it also has sizeable coal deposits of about 340 million tonnes.
Contributing over half of India’s total tea production, Assam is the single largest tea producing region in the world. By measure, every seventh cup of tea sipped across the globe is Assam tea. Moreover, Assam also has a burgeoning horticulture industry, which can be harnessed to benefit the agro- and food processing sectors.
The state government of Assam has been keenly working with the Indian central government to begin direct flights between the state and ASEAN cities to improve connectivity. On top of that, the Modi administration has also upped its urgency towards the building of the India-Myanmar-Thailand Trilateral Highway. The completion of this highway will provide an efficient land transport route through Assam to parts of Myanmar and northern Thailand, and by extension, the rest of Indochina, as well as southbound routes towards Malaysia and Singapore.
The government of Assam has also put in place an effective single window clearance mechanism to facilitate customs clearance. With 15 waterways, Assam is home to almost 10 percent of India’s navigable waterways. The Brahmaputra and Barak rivers, which span the length and breadth of Assam, are crucial in connecting the states to ports in Chittagong, Bangladesh, serving to facilitate trade with ASEAN.
During a two-day global investment summit in February this year, the Chief Minister of Assam, Sarbananda Sonowal inked 200 memorandums of understanding (MOUs) with various investors totalling an estimated US$15 billion. The summit was a showcase of Assam’s potential as the state aims to feed its appetite for investment.
The China factor
Besides developing its laggard northeast region, Assam is a crucial lynchpin in India’s drive to compete with China’s growing influence in Southeast Asia. India is unmistakably late to the Southeast Asian gold rush, while Beijing has been quick to make inroads in the region, primarily via the trillion-dollar Belt and Road Initiative (BRI).
India’s open arms in welcoming ASEAN investors hides another boon for its geo-strategic agenda. The influx of investments also comes on the back of the increased people-to-people and business-to-consumer relations that will inevitably be fostered.
Riding on this wave, India may be able to counter China’s charm offensive with one of its own. The entrenching of business and economic ties will undoubtedly create a state of economic interdependence between ASEAN members and India, which will serve as a bedrock for the cultural ties that will presumably follow.
Modi’s overall strategy towards cultivating ASEAN relations has been centred on the fact of India’s shared cultural heritage with Southeast Asia. He has reminded leaders of the 10-member organisation of the cultural ties shared between Southeast Asia and the Indian subcontinent. As ASEAN is the next frontier for development in the world, India’s actions are akin to killing two birds with one stone – Assam would play a vital role in this strategy.