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Editorial Articles


Issue No 37, 11 December-17 December 2021

Entrepreneurship And Investment Scenario In North East

Atul K Thakur

In recent decades, the issue of asymmetric migration into the Northeast, which kept crucial development debates overtly impacted, has caused deep insecurity among the local population. Consequently, it is hardly surprising that observers find Northeastern states having much potential, though it remains untapped to a large extent. The region is yet to benefit from the boom in the national economy, and there is still a glaring need to facilitate inclusive growth in the Northeastern region. For that to happen, the developmental discourses should be democratized to keep participatory governance as a model widely practiced and emulated.

In post-independence India, industrialization strategies for the Northeast put undue weightage on heavy industries. That made the Micro, Small, and Medium Enterprises (MSMEs) sector secondary in value until its real contribution was felt in the industrial development of the Northeast and the Indian economy at large. As per the Confederation of Indian Industry (CII)'s report, Creating Competitive SMEs, SMEs constitute over 90 percent of total enterprises in most economies and are credited with generating the highest employment growth rates and account for a significant share of industrial production and exports. In India too, SMEs play a pivotal role in the overall industrial economy of the country. SMEs are thus essential for the national objectives of growth with equity and inclusion. Despite an impressive standing, the MSMEs continue facing problems at every stage of operation, whether in the purchase of raw materials, manufacturing of products, marketing of goods, or raising finance. Moreover, the market reforms since 1991 have intensified the competition for MSMEs-both in domestic and overseas markets. That has made it essential for Indian MSMEs to cope with these challenges and improve and sustain competitiveness through rational cost optimization, improved quality, offering better choices by introducing innovative measures and upgraded technology.

 According to a CII-PWC reportInnovation-Changing the MSME Landscape, statistics are already emerging on the increasing importance of innovation and its scale and scope among the country's firms today. Also, a study by the National Knowledge Commission of India reveals that 42 percent of large firms and 17 percent of MSMEs have introduced 'new to the world' innovations. Seventeen percent of the large companies rank innovation as the top strategic priority, and 75 percent rank it among the top three priorities. So innovation is an area where light industries are making the voyage with positive outcomes. The SMEs functional in the Northeast should also make strides to catch up with this important trend.

In the last two decades, economic growth in the Northeast has been satisfactory, with an annual growth rate of over 8 percent. A spectacular rise in the service sector has helped in the sustenance of high growth in the region. Over the decades, however, agriculture has suffered very badly due to unpredictable monsoons and faulty mechanization offers. As early efforts of unsystematic heavy industrialization mostly failed in the region, manufacturing became dominated by SMEs in due course of time.

The state of Assam is better in terms of entrepreneurship development when compared to the other states in the Northeast. With an upscale market and good road/ rail connectivity, Guwahati is naturally placed to lead the entrepreneurial activities and attract large-scale investments. However, it is also true that the other six states present equally favorable atmospheres for SMEs, as the concern for environmental degradation is relatively high among the local population. The local residents prefer light industries instead of heavy and polluting industries that create big tussles among the different stakeholders of the industries concerned and harm the ecosystem.

 Sensing the promising opportunities available in the Northeast, industry chambers such as the PHD Chamber of Commerce and Industry (PHDCCI), CII, FICCI are increasingly focusing on this region to score well by infusing energy in SMEs, supported by local entrepreneurial skills. The spread of SMEs in the Northeast will proportionally generate quality employment and check outbound migration besides creating the base of sustainable industrial development in the region. Consequently, the big political issue of 'Northeast's alienation' from the rest of India can come to a halt. The asymmetric outcome of heavy industrialization and certain policies adopted towards natural/ human resources need to be rectified by relying more on the local choice model rather than imposing tailor-made solutions in the Northeastern states. The growing sensitivity on this is a welcome sign and should help the Northeast reach the center stage of growth and prosperity.

Despite having many commoalities, all the seven states of the Northeast are distinct in their ways. Thus, keeping this diversity in mind is also essential for policymakers and prospective entrepreneurs. Also, there is a need to sideline misplaced apprehensions related to the complex geography of the Northeast and the adjoining international borders: a business in no significant way has much chance of being influenced too much by all these factors. In the changing times, the issues of politics and economy cannot be taken separately, as the integration among the groups and individuals is an established phenomenon. So, industries need to make greater adjustments keeping in view the prevailing conditions in each state.

As economic rebounding is the need of the hour to brave a new post-pandemic world, there should be greater collaboration between the government and industry Noticeably, the global pandemic Coronavirus or Covid19 is being termed as a 'one in hundred years' crisis, which has already impacted lives and livelihoods in an unprecedented adverse manner. Some of the biggest changes that were never expected have taken place. As the crisis has had global nature, India is severely impacted as well.

The world is self-assured to see a sort of reset, it is the time for the government and industry to reckon the urgency of figuring out their immediate priorities, including on supporting the MSMEs, the backbone of the Indian economy. A change in approach is much-needed at this point in time; before the fundamentals of the world order go into reset mode, there should be a determination to revive the MSMEs financing to support the much-needed demand factor of the economy. This is the time for proactive collective action to come out of the trying time with a blueprint for revival of the economy.

At the idea front, it is wellunderstood now why the MSMEs sector is seen as the most significant contributor to the socio-economic development of the country and is considered the growth engine of the Indian economy. In the last few decades, especially followed by the economic liberalisation plan in the early 1990s, the sector has formidably contributed to the Gross Domestic Product (GDP) of the country, enhancing exports and creating the highest numbers of employment. Noticeably, the sector has provided a muchneeded traction to entrepreneurship development and industrialization across India, thus, even reaching the places hitherto left out of the economic processes.

The Ministry of Micro, Small & Medium Enterprises (MSMEs), Government of India (GoI), and the respective Ministry in State Governments envision a vibrant MSME sector by promoting growth and development of the MSME Sector, including Khadi, Village, and Coir Industries, in cooperation with concerned Ministries/Departments and other stakeholders, by providing support to existing enterprises and encouraging the creation of new enterprises.

 The Government of India has made a number of policies for the growth of the Indian MSMEs and to make them globally competitive with innovations and technology; among others, they are:

· MSME Credit Health Index (Launched on November 2, 2020). 

· MoMSMEs adoption of the latest IT tools for MSMEs (October 2020). 

· GoI Task Forces on MSMEs (September 2020). 

· Udyog Aadhaar Memorandum (UAM) for online registration. 

· MSME Data Bank. 

· My MSME. 

· MSME Sampark. 

· Digital Payment.

To encourage local production, the government is working on policies to increase MSME exports and lower imports. In addition, a Rs 200 crore (US$ 28.4 million) scheme has been sanctioned to set up 12 technology centres, which are expected to be completed by 2021. There are numerous schemes for credit and financial assistance, skill development training, infrastructure development, marketing assistance, technological and quality upgradation, and other services for MSMEs across the country. In order to achieve the goal of doubling the Indian economy to US$5 trillion in five years, MSMEs are being rightly given the innovative push, and this should help the Indian economy in going forward progressively.

While the Northeastern region has been part of the structural reforms processes that India started way back in 1991 with a greater economic liberalisation drive and ceaselessly pursued since then, it is also time to project the region as a major investment destination with immense business opportunities. Surrounded by international borders including Nepal, Bhutan, Bangladesh and Myanmar-the region is uniquely placed to strengthen India's peaceful growth mission of regional and subregional economic cooperation in the neighbourhood.

An ever-increasing focus on MSMEs is undoubtedly helping the startup culture to grow in the region; with the bright, soft skills and geographic advantages, the youth of the Northeastern region is leading from the front in rescripting the business fundamentals in India.

Essentially, better inclusion of thoughts and processes related to planning for the Northeast will usher in a new phase of development. The entrepreneurial spirit in the region is quite positive and with a greater support from policy makers and lenders are certainly giving a new growth impetus to MSMEs to grow and support the youth in finding gainful employment. Among the key success stories, it is crucial to recollect the journey of Sikkim as the place for authentic organic farming with impressive logistic support and market linkages-thus enabling the farmers' to avail the actual dividend of economic reforms. The growth of MSMEs will be one among many desirable outcomes, which will shape the future of the up-and-coming Northeastern region of India. As the world's largest democracy and one of the most significant economies of the world, India is a zone of hope. Its Northeast region must be viewed from the same prism and should be supported and projected as the major growth corridor with close proximity to nature. In fact, the Northeast region has all the reasons to be a zone of sustainable industrial development. A view of that sort is already driving a silent transformation in Northeast, something that should be noticed and acknowledged too.

 (Atul K Thakur is a policy professional, columnist and author with special focus on South Asia.

The views expressed here are personal.

He can be reached at: summertickets@gmail.com)