Unlocking Export Potential in the North East: The MSME Way

INTRODUCTIONProject Overview and ObjectivesEconomic Profile of the RegionScope of the Study

EXPORT POTENTIAL OF THE REGION IntroductionAnalysis Of Current Exports from the RegionState Wise Export AnalysisGranular Analysis of Export Potential of Select CommoditiesSpicesFruitsBambooHandicrafts

MSME IN THE NORTH EASTState Wise MSME ScenarioMSME Export Promotion SchemesNorth East Industrial Development SchemeExport Promotion Measures In IndiaExport Promotion Schemes, Ministry of Commerce & IndustryNational Manufacturing Competitiveness ProgrammeOther Central Government Schemes for MSMEsStrategy for Cluster Based Export PromotionInstitutional Infrastructure for MSME Promotion

CHALLENGES IN EXPORT PROMOTION

CONCLUSIONS AND RECOMMENDATIONS

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Contents

The project will build upon the wealth of academic and action research available on the export potential of the region

INTRODUCTION

Export Potential In the North East | How MSMEs Can Unlock It

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North East India

INTRODUCTION

5

1.1 Project Overview and Objectives

UNDP and the EXIM Bank of India are jointly implementing a project titled ‘Capacity Building of the MSMEs in North East India for Export Competitiveness.’ The project aims to create stronger MSMEs in the region to boost export, generate employment and provide livelihood opportunities to the youth and women via partnership with National and Local training insti-tutions for delivering the entrepreneur orientation programs, and sensitization workshops for export promotion agency officials from the state governments of the region.

The primary objective of the project is to overcome some of the key challenges by promoting export potential of the existing MSMEs in industrial clusters of the North-Eastern States. The project proposes to achieve the objectives through the following strategic inputs:

y Value addition to the primary products exports like horticulture, food processing, tradi-tional cottage industry, sericulture, etc.

y Cluster based approach to strengthening export capabilities of MSME in the region y Benchmark industrial clusters of the region to country’s best export cluster in similar

product category and develop appropriate indicators for measuring progress y Encourage peer to peer interactions for sharing of good practices for export promotion y Use ICT tools for operationalizing an interactive platform for knowledge exchange

The project will build upon the wealth of academic and action research available on the export potential of the region. It will commission state specific strategy papers for export oriented industrial growth and support the preparation of bankable proposals. This knowledge repository will be housed on a web-based knowledge platform which will act both as resource support to exporting MSMEs as well as a dynamic and livelihood exchange of the issues and challenges faced by all the stakeholders in the promotion of exports from the region.

The expected key results under the project are:

y Enhanced capacity of the selected MSMEs for export competitiveness using a clus-ter-based approach. The relevant sectors such as horticulture, food processing, tradi-tional cottage industry, sericulture, etc. would be the focus of the project

y Benefit to at least two clusters each in the states of Assam and Mizoram in the first year. By the third year, at least twenty bankable models are created in the selected states

y Bankable proposals based on local resources availability and comparative advantage of the identified clusters prepared and disseminated to prospective entrepreneurs

y Knowledge ecosystems for faster replication and scaling strengthened and knowledge platform for export promotion in the region established; additionally, the institutional ecosystem of North-East Region for export promotion strengthened

The initial focus of the project will be in the states of Assam and Mizoram, subsequently other states of Manipur, Meghalaya, Nagaland, Sikkim and Tripura will also be covered.

INTRODUCTION


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1.2 Economic Profile of the Region

The NER, comprising the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura, has an area of 2.62 lakhs square kilometers (7.9% of the country’s total area ), a population of 46 million (3.8% of all India population, 2011 census) and USD 76 billion nominal GDP (2.91% of All India GDP). North East India shares 2% of the border with the mainland of the country and more than 98% is linked with international borders i.e. Bangladesh, Bhutan, China, Myanmar and Nepal (2000 kms.). This region is bountifully endowed with bio-diversity, hydro-potential, oil and gas, coal, limestone and other mineral resources. It is also rich in forest resources which occupy nearly half of the total area in the region. Forest resources include rubber, cane and bamboo timber, hardwood, medical plants and herbs.

However, the region lags in terms of economic growth which is commensurate to its resource endowment. Only a negligible percentage of the country’s total number of factories is in the region. Most of these are engaged in manufacturing of food products, wood and wood-based items and non-metallic mineral products. Tea and petroleum are the two important indus-tries and both these industries play a vital role in NER’s economy. The other large and medi-um-scale industries include cement, paper, sugar, jute, fertilizers and spinning. In the medium and small-scale sector, plywood, handicrafts and handlooms occupy a significant share.

State All Crops Cereals Pulses Oilseeds Fruits Veg. Spices Sugarcane

ARUNACHAL PRADESH 844 359 12 33 306 33 69 32

ASSAM 12671 5076 125 189 2078 3822 334 1047

MANIPUR 1646 444 28 31 468 317 24 334

MEGHALAYA 1303 302 8 12 395 495 90 0

MIZORAM 677 68 6 2 330 179 69 23

NAGALAND 1830 545 41 68 374 495 119 188

SIKKIM 304 96 6 7 23 107 65 0

TRIPURA 2459 744 8 6 854 793 18 36

All North East 21734 7634 234 348 4828 6241 788 1660

All India 909253 242948 17639 29387 90183 169064 6988 353042

2% 3% 1% 1% 5% 4% 11% 0.47%

INTRODUCTION

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State-wise Number of Reporting Bank-offices, Deposit and Bank Credit of SCBs

States or UTs Number of Reporting

Bank Offices

Deposit (` Crore) Credit (` Crore) CD Ratio

March Sept March Sept March Sept Mar Sept.

2017 2017 2017 2017 2017 2017 2017 2017

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Arunachal Pradesh 152 152 12068 11572 2875 3092 24% 27%

Assam 2276 2298 122305 124635 48776 50949 40% 41%

Manipur 158 166 7792 7034 3004 3420 39% 49%

Meghalaya 343 344 20717 21289 5301 5676 26% 27%

Mizoram 185 189 7217 7628 2603 2750 36% 36%

Nagaland 159 162 9508 9243 2967 3171 31% 34%

Sikkim 131 131 7028 7598 1903 2045 27% 27%

Tripura 442 444 20721 21324 7357 7734 36% 36%

All India 137770 139045 10751439 10927041 7927003 8005997 74% 73%


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Arunachal Pradesh

INTRODUCTION

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State-wise profile

ARUNACHAL PRADESH

Arunachal Pradesh, with an area of 83,743 sq kms, is the largest state in North Eastern India. It shares borders with the neighbouring countries of Bhutan in the west, China (Tibet) in the north & northeast & Myanmar in the east and southeast. The Indian states of Assam and Nagaland border it in the south. The state’s GSDP (in INR) increased at a compound annual growth rate of 14.06 per cent between 2011-12 and 2017-18 to reach INR 243.53 billion (US$ 3.78 billion) while the per capita GSDP increased at 11.79 per cent to INR 154,229 (US$ 2,393). The primary sector was the biggest contributor to the Gross State Value Added (GSVA) in 2017-18 with a share of 43.29 per cent, and it grew at 13.47 per cent CAGR (in INR) between 2011-12 and 2017-18. The secondary sector contributed the lowest (22.02 per cent) to the GSVA in 2017-18; however it grew the fastest at 18.62 per cent CAGR between 2011-12 and 2017-18. The tertiary sector contributed 34.69 per cent to the Gross State Value Added in 2017-18 and grew at 11.75 per cent CAGR between 2011-12 and 2017-18.

The diverse topography of the state offers opportunities for non-timber based industries such as bamboo, cane and medicinal plants. Major agro and forest based industries in the state are related to tea, fruit, non-timber and plywood industries. Around two-thirds of the state’s population is dependent on climate sensitive natural resources such as agriculture, forest, bio-diversity and water availability. Non-timber based industries include bamboo, cane, rubber and medicinal plants.

STATE ARUNACHAL PRADESH

All Production 844

Cereals 359

Pulses 12

Oilseeds 33

Fruits 306

Vegetables 33

Spices 69

Sugarcane 32

All figures in MT* Source: Directorate of Economic & Statistics, Department of Agriculture Cooperation & Farmers Welfare* Average production of 5 years ending 2014-15


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FOOD PROCESSING CLUSTERS IN ARUNACHAL PRADESH

Category Districts

Cereals Processing Tawang, Upper Subansiri

Ginger Products & processing Upper Siang, Papumpare, Lower Dibang Valley

Fish & Fisheries Products Papumpare, West Siang, Changlang, Lower Subansiri

Sugarcane Products Upper Siang, Papumpare, Upper Subansiri

Vegetables Processing Papumpare, West Kameng, Changlang

Rice Mills West Kameng, East Kameng, Tawang, Siang, Namsai, Lohit

Fruits Processing West Kameng, Papumpare

Arunachal Pradesh is an “Orchid Paradise”, accounting for 601 species of orchids, or 52 per cent of the species known in India. Various orchid centers are situated in Itanagar, Tipi, Sessa, Dirang, Jengging, Roing, which have a good germ-plasm collection of nearly 400 species of orchids as well as hybrids. An orchid research center has been established at Tipi to promote orchid conservation, research and development. Textile is a grass-roots industry in Arunachal Pradesh and provides employment, mainly to women. Most of the units are home-based and have a small scale of operations. The state boasts of an enriching array of unique and appealing handloom designs from each of its tribes. The products include skirts (gale), shirts (galuk), cotton shawls, side bags, and curtain cloth. Carpet making is one of the important occupations in the districts of Tawang, West Kameng, Changlang and Upper Siang. The state’s carpets have received national and international recognition and commercial success due to their quality.

The state has considerable mineral reserves that offer huge potential. This includes reserves/resources of coal in Namchik Namphuk Coalfields; dolomite in West Kameng district; fuller's earth in Tirap district; graphite in Lohit, Upper Siang and Upper Subansiri districts; and lime-stone in Dibang Valley, Lohit, Upper Siang and Upper Subansiri districts.

RESERVES/RESOURCES OF MINERALS IN ARUNACHAL PRADESH

RESERVES

(MILLION TONS)

Coal 86.5

Dolomite 78.3

Limestone 482.79

Graphite 72.75

Fuller's earth 20.01

Quartzite 5.27

INTRODUCTION

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Textiles and handicrafts from the state are in demand in neighbouring countries. Arunachal Pradesh has 12 industrial estates located in different districts and spread over a total area of 51.9 hectare. These industrial estates have been developed in land-areas ranging from 4,540 to 202,342.8 square metres, with the primary objective of growth and development of small scale industries.

NOTIFIED INDUSTRIAL ESTATES LOCATION DISTRICT AREA (SQ M

Deomali Tirap 18,360

Khonsa Tirap 4,540

Pasighat East Siang 80,080

Tawang Tawang 28,665

Tippi West Kameng 27,961

Wanghoo West Kameng 60,705

Naharlagun Papumpare 32,376

Chandranagar Papumpare 16,188

Namsai Lohit 16,188

Changlang Town Changlang 11,372

Khachang Changlang 20,025

Bam West Siang 202,325

Based on the availability of resources, the state has identified thrust areas for industrial development:

y Industries based on agricultural, horticultural and plantation produce y Industries based on non-timber forest produce such as bamboo, cane (rattan), medicinal

plants/herbs, aromatic grass, tea and coffee y Industries based on locally available raw-materials, except timber y Textiles (handlooms and power-looms), handicrafts and sericulture y Electronics and IT-based enterprises y Mineral-based industries (such as ferro-alloys, cement, etc.) y Facilitation and development of industrial infrastructure, including power and commu-

nications, under public private partnership y Food processing industries and engineering and allied industries (rolling mill, steel mill,

etc.); and y Tourism


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Assam

INTRODUCTION

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ASSAM

The state shares its borders with Arunachal Pradesh, Nagaland, Manipur, Mizoram, Megha-laya, Tripura and West Bengal. The state shares international borders with Bangladesh, Burma and Bhutan. The state is a gateway to North East India. It is the largest economy in the North East and is known for its large industries in the tea and petroleum sector. The state GSDP grew at a CAGR of 11.78 per cent between 2011-12 & 2016-17. In 2016-17, the tertiary sector contributed 51.95 per cent to the state’s GSVA at current prices, followed by the primary sector with a share of 28.72 per cent and secondary sector contributing a share of 19.72 per cent. At a CAGR of 7.34 per cent, the tertiary sector recorded the fastest growth among the 3 sectors from 2011-12 to 2016-17. The growth has been driven by trade, hotels, real estate, finance, insurance, transport, communications & other services. Between 2011-12 & 2016-17, the primary sector expanded at a CAGR of 5.33 per cent and secondary sector grew at a CAGR of 4.25 per cent. The state is rich in water resources and has vast tracts of fertile land, making agriculture the major contributor to the state economy and a source of livelihood to a significant proportion of the population of the state. The agro-climatic conditions support cultivation of a wide range of horticultural crops, including plantation crops and various fruits and vegetables, flowers, spices, medicinal and aromatic plants, nut crops and tuber crops.

Pineapple, banana, cauliflower, broccoli, rose, rice, papaya, sugarcane, turmeric, jute, potato and bougainvillea are among high yielding varieties of horticulture crops in Assam. It also includes traditional fruits like Carambola, Leteku, Paniyal Thekera, Au tenga etc.

STATE ASSAM

All Production 12671

Cereals 5076

Pulses 125

Oilseeds 189

Fruits 2078

Vegetables 3822

Spices 334

Sugarcane 1047



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Assam and the North East are mostly organic by default – according to government figures, of the net cultivated area of 4.3 million hectares, around 30.92 lakh hectares have never seen the use of chemical or inorganic fertilizers. Assam has been using 56 kgs of chemical fertilizer per hectare on an average. Assam is embracing organic farming in a big way with the help of the central government.

The climate and general environment of Assam is well suited for sericulture. Traditional varieties of silk cultured in the state include Eri, Muga and Mulberry. Muga silk, known for its fine sheen and golden color, is used by the local silk-weaving industry, which has contributed to the development of Muga in the state.

Assam enjoys global monopoly in terms of Muga silk (also known as golden silk) production. The state accounts for around 95 per cent of global Muga production. Moreover, Assam is the country’s major Eri silk producer (accounting for 65 per cent of the country’s Eri silk production). Silk Production in the state for 2017-18 (P) is 4,861 MT.

For the development of Eri and Muga silk industries in the state, the government had taken up the Assam Silk Outreach Mission from 2016 at an estimated cost of US$ 366.63 million for a total period of 10 years. By 2025, this mission aims to produce 1 million kg of Muga silk and 10 million kg of Eri silk. Further, in 7 districts of the state, Integrated Sericulture Development Project is being applied, out of which 3 districts are for Eri, while 4 districts are for Muga.

Other potential areas of investment include power and energy, mineral-based industries, tourism and crude oil refining. Assam is rich in natural resources such as natural oil and gas, rubber, tea, and minerals such as granite, limestone and kaolin. Assam contributed about 51.82 per cent in India’s total tea production in 2016-17. Tea production in the state stood at nearly 676.31 million kg in the year 2017-18.

INFRASTRUCTURE DESCRIPTION

Software Technology Park A software technology park has been set up at Guwahati, near the Lokpriya Gopinath Bordoloi International Airport, by the Software Technology Parks of India Limited (STPI).

Food Processing Park India’s government has sanctioned a food processing park with a total project cost of US$ 1.2 million. The park is being set up near Chaygaon in the district of Kamrup (rural). The implementing agency is Assam Small Industries Development Corporation Limited.

Agri-Export Zone for Ginger India's government has sanctioned an agri-export zone for the state for fresh and processed ginger. The nodal agency for implementing this project is Assam Industrial Development Corporation Limited. The zone is located in eight districts: Kamrup, Nalbari, Barpeta, Darrang, Morigaon, Nagaon, Karbi Anglong and North Cachar (NC) hills of Assam.

Biotech Park Considering the importance of biotechnology, an integrated park to provide all infrastructural and other related services has been developed in Guwahati. The Guwahati Biotech Park undertakes research activities in biotechnology. The park was inaugurated on 25th February 2011.

INTRODUCTION

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Tea Park A tea park is being set up at Chaygaon by Assam Industrial

Development Corporation (AIDC) in Kamrup District in an

area of approximately 100 acres of land. The park would

provide facilities for blending, storage and trans-shipment

of Assam tea for the world market.

Export Promotion Industrial Park Assam Industrial Development Corporation (AIDC) has

implemented an Export Promotion Industrial Park (EPIP)

at Amingaon, near Guwahati, in the district of Kamrup, at

an estimated cost of US$ 3.0 million. The total area of

the park is 68.1 acres. AIDC has constructed 3 industrial

sheds and allotted them to 3 industrial units. There are

38 companies in the park, offering direct employment

opportunities to 4,000 people & indirect employment

opportunities to about 12,000 people.

Industrial Growth Centers Industrial growth centers with supporting infrastructure

have been set up at Balipara in the Sonitpur district and

Matia in Goalpara. The Matia industrial growth center has

been set up with a total project cost of US$ 4.5 million &

spans 700 acres. The Balipara industrial growth center

has been set up with a total project cost of US$ 5.3 million

and is spread across 400 acres.

Integrated Infrastructure Development (IID) Centers

IID centers have been planned at Parbatpur, Serphangguri,

Dalgaon, Demow, Bhomoraguri, Malinibeel, Dahudi,

Silapathar, Rangia, Banderdewa and Titabar. The projects

at Bhomoraguri, Dalgaon, Malinibeel, Titabar, Demow,

Dahudi, Banderdewa, Silapathar and Rangia are already

completed and the other projects are also on the verge of

completion.

Border Trade Centers (BTC) BTCs are located at Mankachar (Dhubri), Sutarkandi

(Karimganj) and Darranga (Kamrup).

Tea occupies an important place among the agriculture-based industries in Assam. It accounts for a share of over 55 per cent in the country’s overall tea production. About 17 per cent of the workers of Assam are engaged in the tea industry. There are more than 765 tea gardens in the state of Assam. During 2018-19*, production of teas in the state stood at 99.25 thousand MT. Tea is grown in the Brahmaputra and Barak plains. Tea gardens are mostly found in the districts of Tinsukia, Dibrugarh, Sibsagar, Jorhat, Golaghat, Nagaon and Sonitpur. A Special Purpose Tea Fund (SPTF) for rejuvenation of the tea bushes has been created by the government. This would benefit 700-800 tea gardens of the state. The government has secured a Geographical Indication (GI) for the tea produced in the state. As a result ‘Assam Tea’ is known as ‘Assam Orthodox Tea’. Guwahati is the largest city of the state as well as the region.


16

Manipur

INTRODUCTION

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MANIPUR

Manipur is situated in the eastern-most corner of Northeast India. The state shares borders with other north-eastern states of Nagaland, Mizoram & Assam and the neighbouring country of Myanmar. There has been a drastic shift in the sectoral contribution from secondary to tertiary sector. In 2016-17, the tertiary sector contributed 64.22% to the state’s GSVA at current prices, followed by the primary sector with a contribution of 21.73%. The tertiary sector grew at an average rate of 10.14% between 2011-12 and 2016-17; driven by trade, hotels, real estate, finance, insurance, transport, communications and other services. The secondary sector grew at an average rate of 8.35% during the period between 2011-12 and 2016-17.

The primary sector grew at an average rate of 12.46% during 2011-12 and 2016-17.

STATE MANIPUR

All Production 1646

Cereals 444

Pulses 28

Oilseeds 31

Fruits 468

Vegetables 317

Spices 24

Sugarcane 1047


Manipur is one of India’s largest bamboo producing states and a major contributor to the country’s bamboo industry. In 2017, the state accounted for 10,687 square kms of bamboo bearing area. Manipur accounts for about 25% of the total growing stock of bamboo of the North Eastern Region of India and 14% of the country. Three common facility centers for bamboo processing have been established at Tamenglong, Churachandpur and Imphal. Manipur has the highest number of handicrafts units, as well as the highest number of craft persons comprising skilled and semi-skilled artisans in the entire north-eastern region. Handlooms is the largest cottage industry in Manipur and the state ranks among the top five in terms of the number of looms in the country. It has around 40 active handloom production centers. Most of the silk weavers, famous for their skill and intricate designing, are from Wangkhei, Bamon Kampu, Kongba, Khongman and Utlou.


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BLOCK LEVEL CLUSTERS

HANDLOOM PRODUCTS

Wangoi Saris, Shawls, Bedsheets, Cushion Covers

Thoubal Shawls

Singhat Tribal Shawls, Lungies, Scarves

Bishnupur Saris, Phanek, Mosquito and Fishing Nets

Keirao Bitra Saris, Shawls, Bed Sheets, Phanek, Mosquito and Fishing Nets

Machi Block Tribal Shawls, Lungies, Scarves, Dress Materials, Phanek, Neck Ties

Nungba Tribal Shawls, Lungies , Scarves, Dress Materials, Phanek, Neck Ties and

School Uniforms

Lungchong Maiphei Shawls, Bed Sheets

Saitu Gamphazol Tribal Shawls, Lungies, Scarves, Dress Materials, Phanek, Neck Ties and

School Bags

Haorang Sabal Saris, Shawls, Bed Sheet, Phanek, Mosquito and Fishing Nets

Fabrics & shawls of Manipur are in great demand in the national & international market.

INTRODUCTION

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Fabrics and shawls of Manipur are in great demand in the national & international market.

Manipur has the advantage of acting as India’s ‘Gateway to the East’ through Moreh town, which is the only feasible land route for trade between India and Myanmar and other South-east Asian countries. The Ema Bazaar is one of India’s largest markets run by women. This market majorly sells handloom and handicraft products such as earthen pots, knives, shawls and puppets, as well as all kinds of dried fish and vegetables. Manipur has two varieties of silk: mulberry and vanya. Mulberry includes Bivoltine and Cross Breed, and Vanya includes Eri, Muga and Tussar. The Manipur Sericulture Project was initiated by the Government of India with the assistance of the Government of Japan, particularly to provide employment to women. Raw silk production in Manipur during 2017-18 (P) stood at 389 metric tons.


Nilakuthi Food Park The food park is constructed on a land area of about 30 acres at Nilakuthi at a cost of US$ 5.3 million. The park will host 49 food processing units for which common facilities will be provided.

Integrated Infrastructural Development Project (IID)

The Government of India has sanctioned the IID project at Moreh at a total project cost of US$ 1.19 million.

Export Promotion Industrial Park (EPIP) The Government of India has approved the EPIP project at Khunuta Chingjin in the Kakching sub-division of Thoubal district at a project cost of US$ 3.1 million.

Trade Centers The Government of India had sanctioned US$ 0.4 million for construction of 2 trade centers, 1 at Moreh and another at Imphal.

Industrial Growth Center The Government of India has approved 1 industrial growth

center project at Lamlai-Napet with a total project cost of

US$ 6.2 million.


20

Meghalaya

INTRODUCTION

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MEGHALAYA

Meghalaya shares its border on the north and east with Assam and on the south and west with Bangladesh. The state has most of its land covered by hills interspersed with gorges and small valleys. Endowed with dense forests and rivers cascading down undulating terrain, this region is one of the most scenic of the North Eastern States. The topography, climate and socio-economic conditions make the people depend more on Animal Husbandry activities mainly because traditional agriculture in hilly areas allows only about 10% of the land to be cultivated in the state. Heavy rainfall in hill slopes not only causes soil erosion, but also makes it acidic by removing the soluble basic part of the soil by the solvent action of the run-off water and loss of productivity. Indiscriminate mining for stones, gravels, coal, etc. diminishes the area under cultivation, forest land and grass cover. Under such a situation, livestock and poultry farming is the only alternative avocation on which the villager can fall upon for a subsidiary living. At a CAGR of 9.61 per cent, the tertiary sector was the fastest growing among the 3 sectors during 2011-12 to 2016-17. Growth has been driven by trade, hotels, real estate, finance, insurance, transport, communications and other services. The secondary sector, the second largest contributor to Meghalaya’s economy, expanded at a CAGR of 2.98 per cent between 2011-12 and 2016-17. The primary sector grew at a CAGR of 4.40 per cent between 2011-12 and 2016-17.

STATE MEGHALAYA

All Production 1303

Cereals 302

Pulses 8

Oilseeds 12

Fruits 395

Vegetables 495

Spices 90



22

INTRODUCTION

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Meghalaya has a climate that supports agricultural and horticultural activities. The state offers potential for investment in these areas. Turmeric produced in the state of Meghalaya is considered to be one of the best in the world as it contains 7.5 per cent of curcumin. During 2017-18, the state produced 443.02 thousand tons of fruits under an area of 35.50 thou-sand hectares. Similarly, 92.62 thousand tons of spices were produced in the state under an area of 18.70 thousand hectares during 2017-18. Besides the major food crops of rice and maize, the state is also known for its horticultural crops like orange, lemon, pineapple, guava, litchi, banana, jack fruit and temperate fruits such as plum, pear, peach etc., as well as potato, ginger, turmeric, black pepper, areca nut, bay leaf, betel vine, short-staple cotton, jute, mustard and rapeseed etc. The state produces a substantial quantity of oranges, peaches, pineapples, pears, guavas, plums and bananas of superb variety. It also grows plenty of potatoes, tapioca, bay leaves, ginger, maize and jackfruit. There is enough potential in the state for setting up a starch based processing unit. Plantation crops like coffee, rubber, black pepper and arecanut are also important products where investment potential exists. Tremendous potential for investment and development exists in food processing.

Meghalaya has extensive deposits of minerals like coal, limestone, granite, clay, etc. Coal, which is an important input, is available in plenty in all districts and particularly in the southern slopes of the state. Limestone is another mineral that exists in an extensive belt (approx 200 km long) along the southern border of Meghalaya. Total inferred reserve limestone within the State is about 5,000 million tons. The quality of limestone in the state has Calcium Oxide (CaO) content of 53% and can be of use in steel, fertilizer and chemical industries. Granite of excellent quality is being mined in the East and West districts of Khasi hills. Sizable deposits are estimated and can be found in various shades and colors. Clay of various types such as Kaolin (China clay), white clay and fire clay are found in various parts of the states. This clay is suitable for the ceramic, paper, rubber and refractory industries. There are a few hundred million tons of clay reserved in the state. Economically viable deposits of minerals like gypsum, phosphorite, glass-sand, base metals, quartz and feldspar can be located in various parts of the state.


24

Mizoram

INTRODUCTION

25

MIZORAM

Mizoram shares borders with other north-eastern states of Manipur, Tripura and Assam and neighbouring countries of Bangladesh and Myanmar. With a CAGR (in INR) of 22.75 per cent between and 2011-12 and 2017-18, the primary sector has been the fastest growing sector and was also the largest contributor to Mizoram. With a CAGR (in INR) of 22.75 per cent between and 2011-12 and 2017-18, the primary sector has been the fastest growing sector and was also the largest contributor to Mizoram’s economy in 2016-17 with a 32.86 per cent share in the state’s GSVA. The growth was driven by agriculture, fishing and forestry. The tertiary sector contributed 43.50 per cent to Mizoram’s GSVA in 2016-17 and grew at 9.64 per cent CAGR between 2011-12 and 2016-17, while the secondary sector grew at 20.95 per cent CAGR in the same period and contributed 23.64 per cent in 2016-17. Mizoram has a large forest area and contributes 14 per cent to the country’s bamboo production. The climatic conditions in the state provide a breeding ground for commercial rearing of all kinds of silkworm.

Approximately 60 per cent of workers in Mizoram are engaged in agriculture and allied sectors. Paddy is the principal food crop and the staple food in Mizoram. The state has a minimum annual requirement of 180,000 metric tons of rice. Over 65 per cent of the state’s rice requirement is currently being met by imports from other states. Rice production for 2017-18 is estimated at 80,000 metric tons. Total area under cultivation of oil palm increased 885 hectares during 2017-18 (up to November 2017) whereas the production of crude palm oil reached 291 metric tons during the same time period. Agro-climatic conditions in Mizoram are suitable for growing a wide range of fruits. Mizoram accounts for about 13.2 per cent of the total fruits produced in the Northeast. Anthurium cut flowers are exported to countries such as the UAE, the UK, Japan and Australia. Programs like New Land Use Policy (NLUP) assist poor farmers to abandon shifting cultivation and change to permanent systems of farming. The state government under NLUP financially assisted 131,940 families against an original target of 120,000 families for doing settled farming instead of the traditional and age-old ‘jhum’ cultivation.

STATE MIZORAM

All Production 677

Cereals 68

Pulses 6

Oilseeds 2

Fruits 330

Vegetables 179

Spices 69

Sugarcane 23



26

Mizoram has identified eight industrial estates, of which five are operational and the remaining are yet to be developed. Zoram Industrial Development Corporation (ZIDCO) is responsible for the overall development of industrial infrastructure in the state. ZIDCO has established an Integrated Infrastructure Development Center (IIDC) at Lunglei district with an investment of around US$ 1 million. The center offers power, water, telecommunication and other ameni-ties for the industrial units. As per the state budget 2015-16, the Government of Mizoram recommended the restructuring of ZIDCO to improve the profitability of the organization. The handicraft production center at Luangmual manufactures Mizo craft items like – Khumbeu, Thulte, Thlangra, Hnam, etc. and promotes the crafts of the state. Thenzawl is to be named “Handloom City” with 821 registered units and turnover of USD 1.68 million, stepping up the impetus for handloom textiles in the state. The state has 37,315 registered handloom units with around 52,741 handloom weavers and allied workers. Ethnic handloom and crafts of Mizoram have a large market in India and abroad. Bamboo crafts and ready-to-wear ethnic clothing are being marketed by the government agencies.

The natural resources, climatic conditions and policy incentives in the state support invest-ments in bamboo, sericulture, tourism, agro-products and agro-processing sectors. Industrial units in the state primarily comprise small scale industries. Mizoram is setting up a special economic zone (SEZ) in the North East with assistance from the North East Council. The SEZ will be located at Khawnuam village in Champhai.

Bamboo forests cover 31 per cent (6,446 sq. kms) of Mizoram’s geographical area, with a yield of 3.2 million tons per year. There is an estimated growing stock of 25.26 million metric tons of 35 varieties of bamboo in the state. 14 per cent of the bamboo stock in India is available in Mizoram. During 2015-16, various initiatives were undertaken by the state government for the enhancement of the bamboo industry. The “Awareness Campaign on Bamboo Furniture & Setting Up of Bamboo Furniture Clusters” and the “Awareness Campaign on Bamboo Utilization and Setting Up of Clusters” took place in 6 villages and 11 villages of the state, respectively. The National Bamboo Mission (NBM), a centrally sponsored scheme, envisages to increase the coverage area under bamboo plantation and consequently increase the yield to 18-20 tons per hectare from the current 3 tons. The Cachar Paper Mill in South Assam (a unit of Hindustan Paper Corp.) is the largest consumer of bamboo resources of Mizoram. Bamboo Development Agency of the state government has entered into a joint venture with private partners for commercial production of bamboo floor boards, parquets and bamboo-teakwood doors. Bamboo-based industries would play a major role in the proposed SEZ. During 2016-17, nine bamboo furniture clusters, eight bamboo handicraft clusters, one bamboo harvesting cluster, as well as three agarbatti clusters were established in the state by the Bamboo Development Agency on account of their adoption of cluster based approach in the sector. The Bamboo Development Agency has also established a bamboo wholesale and retail market in Nisapui in a PPP mode in collaboration with MIEDER in order to yield the primary bamboo products and sell raw bamboo in the state.

Mizoram accounts for about 12 per cent of the total fruits produced in North East India, and the yield per hectare is on the rise because of adoption of modern horticultural practices. With abundant natural resources and supporting policies, the food processing sector offers poten-tial for investment. Allied services such as cold chain management also provide potential for investment. A special purpose vehicle (SPV) has been formed with private sector companies to set up a plant for processing turmeric, ginger, chilli, fruits and other horticultural products. Under the centrally sponsored scheme – National Mission on Food Processing (NMFP), the central government releases funds for the establishment, upgradation and modernisation of food processing industries in Mizoram.

INTRODUCTION

27

Factors such as good climatic conditions, fertility of the soil and rainfall help in the breeding of all kinds of silkworms in Mizoram. All varieties of silk, including Mulberry, Eri, Muga, Tussar and Raw Silk, are commercially produced in the state. During 2016-17, a total of 4,294 farmers from 176 villages were engaged in sericulture across a land area of 5,300 hectares. During 2016-17, raw silk production in Mizoram stood at 76 metric tons and reached 81 metric tons in 2017-18 (up to November 2017).

VARIETY OF SILK PRODUCTION (METRIC TONS)

Mulberry raw silk 70.69

Eri raw silk 4.91

Muga raw silk 0.715

Oak tasar raw silk 0.039

Mizoram has mineral deposits of shell limestone, siltstone, clay mineral, coal seam, oil and gas. Building-quality stones are exported to Bangladesh. The state's 21,087 square km area is considered suitable for exploration of natural oil and gas. Mizoram has numerous natural water springs and offers potential for manufacturing mineral water.


28

Nagaland

INTRODUCTION

29

NAGALAND

The state is surrounded by Myanmar in the east, Arunachal Pradesh in the north, Assam in the west and Manipur in the south. Nagaland’s agro-climatic conditions favor agriculture, horticulture and forestry, offering immense potential in these areas. The state has consider-able resources of natural minerals, petroleum and hydropower. The tertiary sector is one of the fastest growing segments in the state of Nagaland. Between 2011-12 and 2016-17, the tertiary sector grew at a CAGR of 5.82 per cent. It was driven by trade, real estate, banking, insurance, transport, communications and other services. The secondary sector grew at a CAGR of 0.45 per cent from 2011-12 to 2016-17, driven by construction, manufacturing and electricity, gas and water supply. The primary sector expanded at a CAGR 2.26 per cent from 2011-12 to 2016-17.In 2016-17, the tertiary sector contributed 60.92 per cent to the state’s GSVA at current prices. It was followed by the primary sector at 28.71 per cent and the secondary sector at 10.38 per cent.

Nagaland has a suitable climate for agricultural and horticultural produce. It supports multiple crops viz., rice, maize, millet, gram, mustard, bean, sugarcane, rubber, tea, banana, pine-apple, orange, jackfruit, pear, plum, passion fruit, litchi, mango, lemon, sweet lime, potato, sweet potato, tapioca, tomato, pea, chilly, ginger, garlic, cardamom, etc. Jhum cultivation (or shifting cultivation) is widely practised in Nagaland; however, crop yields are low under such cultivation. There is potential for increasing capacity utilization by adopting modern techniques. Agriculture accounts for a significant share in Nagaland’s economy. It contributed 28.42 per cent to the state’s total GSDP during 2016-17. Around 72 per cent of the population is engaged in the agriculture sector.

STATE NAGALAND

All Production 1830

Cereals 545

Pulses 41

Oilseeds 68

Fruits 374

Vegetables 495

Spices 119

Sugarcane 188



30

INTRODUCTION

31

Nagaland promotes bamboo processing as an enterprise, covering various applications such as food-based, medicinal usage, handicraft, art, tiles and flooring. Nagaland Bamboo Development Agency (NBDA) is the nodal office that coordinates with other offices for all bamboo-related research, development and business applications. NBDA has set up the Nagaland Bamboo Resource Center (NBRC) at Dimapur as a center of excellence with the following objectives:

y Function as an information repository and facilitate technology and information transfer to enterprises

y Create awareness on the potential of bamboo y Support bamboo farmers and entrepreneurs in building capacity y In-house pilot bamboo processing units for training entrepreneurs

Agro-climatic conditions in the state are conducive for development of sericulture. Mulberry, Muga, Eri, Oak-Tussar silk are widely cultivated in Nagaland. In 2017-18, production of raw silk in the state of Nagaland stood at around 615 MT.

Nagaland has immense potential to produce organic honey and pollen due to its rich biodi-versity, traditional knowledge, practice of beekeeping and numerous honeybee species. The state is estimated to have the potential to produce 15,000 MT of honey and 100 MT of wax, which together could generate around US$ 100 million annually. The production of honey during 2017-18* was recorded to be 550 MT.


32

SIKKIM

INTRODUCTION

33

SIKKIM

Surrounded by Tibet in the north, Bhutan in the east and Nepal in the west, Sikkim has been officially declared as an organic state by the Central Ministry of Agriculture and Farmers’ Welfare, as well as other recognized agencies of the country. Varied agro-climatic conditions provide ample opportunity for growing rice, maize, urad, mustard, soybean, mandarin orange, potatoes, peas, large cardamom, ginger and turmeric (spices). However, mandarin and passion fruit are the two most promising fruits in terms of cultivation and exports. Export oriented organic farming in the North East region ought to be made a policy priority and will require strong processing infrastructure, quality control, certifications and branding. The state's economy is largely agrarian, based on the terraced farming of rice and the cultivation of crops such as maize, millet, wheat, barley, oranges, tea and cardamom. Sikkim produces more cardamom than any other Indian state (80%) and is home to the largest cultivated area of cardamom.

STATE SIKKIM

All Production 304

Cereals 96

Pulses 6

Oilseeds 7

Fruits 23

Vegetables 107

Spices 65


Of the 6,000 medicinal plants in India, over 424 plants (including the famous Artemisia vulgaris that is used as an antiseptic) are grown in Sikkim. Sikkim is home to around 5,000 species of flowering plants, 515 rare orchids, 60 primula species and 36 rhododendron species. This makes it one of the leading states in the North East region in terms of produc-tion and supply of cut flowers to mainland consumer markets.

The overall performance of the economy of the state during 2016-17 was encouraging. At a CAGR of 12.83 per cent, the tertiary sector witnessed the fastest growth among the three sectors during 2011-12 to 2016-17. The growth has been driven by trade, hotels, real estate, finance, insurance, transport, communications and other services. In 2016-17, the secondary sector contributed 59.27 per cent to the state’s GSVA at current prices. It was followed by the tertiary sector at 31.68 per cent and primary sector at 9.05 per cent. The secondary sector grew at a CAGR of 9.43 per cent between 2011-12 and 2016-17. The primary sector grew at a CAGR of 12.51 per cent between 2011 and 2016-17.


34

INTRODUCTION

35

Brewing, distilling, tanning and watchmaking are the main industries located in the southern regions of Sikkim. A small mining industry exists in the state, extracting minerals such as copper, dolomite, talc, graphite, quartzite, coal, zinc and lead. Sikkim has identified Rang-po-Gangtok, Melli-Jorethang, Jorethang-Rishi & Ranipool-Gangtok as industrial corridors with provision for giving land to investors on a lease basis. Sikkim is a leading north-eastern state in hydroelectric power development with 28 different projects identified under PPP mode. The units that are engaged in the manufacturing sector mainly deal with pharmaceuticals, chemicals, liquors, foam mattresses, food products, iron rods, etc. Sikkim has identified agro-based industries, horticulture and floriculture, minor forest-based industries, animal husbandry and dairy products, tourism-related industries, IT including knowledge-based industries, precision oriented high value-low volume products, hydro-power, tea, education and hospitality as thrust sectors. The Information Technology (IT) Department, Government of Sikkim, is in the process of setting up a state-of-the-art IT Park and National Institute of Electronics and Information Technology (NIELIT) at Pakyong. This, coupled with the recent operationalization, of the Pakyong airport is likely to give a major boost to economic activities in the state.

Floriculture: Sikkim's geographical and environmental conditions are quite conducive for development of floriculture at a higher altitude. The state is also considered to be the Kingdom of Flowers and is an innovator in cultivating Gladiolus. Sikkim is the natural home to more than 600 different types of orchids, over 100 primulas and rhododendrons. A number of cut flowers and bulbs are supplied by the farmers to areas in Delhi, Kolkata, Kalimpong, Uttarakhand and Bihar. The existing industry is at a nascent stage and has the potential to be developed and promoted towards an export-oriented business. The Sikkim government has announced a technical collaboration with floriculturists from the Netherlands and Thailand to develop the state’s potential in floriculture and market cut flowers from the state globally. Sikkim’s most important commercial flowers are Cymbidium Orchids, Gladiolus, Carnation, Gerbera, Asiatic, Oriental Lilies and Anthurium, among others that can be grown for the domestic and export markets. During 2017-18, production of cut flowers and loose flowers in the state is expected to reach 0.09 thousand metric tons and 16.50 thousand metric tons, respectively. During the year 2017-18, the total funds allocated under National Horticulture Mission for North Eastern Himalayan States for the promotion of horticulture were Rs 35,330 crores (USD 5.45 billion), of which Sikkim has been allocated INR 3,050 crores (USD 470.86 million).

Sericulture: Mulberry, Muga, Eri and Oak-Tussar silk are cultivated in Sikkim. The Sericul-ture Directorate is responsible for development of sericulture in Sikkim. The Directorate is maintaining three sericulture farms, one each in east, south and west district. The Forest Department has two sericulture farms, one at Rorathang (east Sikkim) and the other at Mamring and Namthang (south district). The sericulture potentiality of Sikkim state has been explored jointly by the State Department and Central Silk Board, through launching a flagship program titled Catalytic Development Program. Over the years with concerted efforts from both governments, state and central, considerable success have been achieved by the state sericulture industry in generating employment. The target for raw silk production of Sikkim for 2017-18 was 17 metric tons.

Pharmaceutical is an emerging industry in Sikkim due to tax incentives offered by the state government, and also because of low manufacturing and labor costs. Sikkim is home to 14 major pharma companies, which have significant investments in the state. These include Cipla, Sun Pharma, Zydus Cadila, Alembic, IPCA, Alkem Lab, Intas Pharma, Torrent Pharma and Unichem. The North East Industrial and Investment Promotion Policy, 2007, and the pollution free atmosphere are highly beneficial for pharma investments in Sikkim. 100% income tax exemption. Some of the policy incentives are:

y 100% excise duty exemption on finished products y 100% income tax exemption y 30% capital investment subsidy on investments in plant and machinery


36

Tripura

INTRODUCTION

37

TRIPURA

TTripura is bound on the north, west, south and southeast by Bangladesh; whereas in the east, the state has a common boundary with Assam and Mizoram. Tripura is endowed with rich and diverse bamboo resources. Bamboo is one of the major and important natural resources of Tripura. The state sustains tropical moist deciduous forests with patches of forests of evergreen species and a substantial area under bamboo brakes. The climate ranges from moist to humid and annual rainfall varies between 2,250-2,500 mm. At least 19 species of bamboo are commonly found in the state. The state has an area of 7,195 hectares for the production of bamboo.

Tripura is the 2nd largest natural rubber producer in the country, after Kerala. As of 2015-16, production of rubber in the state stood at 44,245 tons as compared to 39,000 tons in 2013-14.

The agro-climatic conditions in the state are favorable for growing various fruits and horticul-tural crops. Tripura’s pineapples and oranges are known for their unique flavor and organic nature. Major spices include Ginger, Turmeric, Chilli, Black Pepper, Cinnamon and Bayleaf.

STATE TRIPURA

All Production 2459

Cereals 744

Pulses 8

Oilseeds 6

Fruits 854

Vegetables 793

Spices 18

Sugarcane 36


As per the 1st advance estimate of 2017-18, total fruit production in the state is 594.70 thousand MT, total vegetables production is 80237 thousand MT, total plantation production is 33.68 thousand MT, total spices production is 18.13 thousand MT.

Tripura holds a strong tea plantation base in India, with 54 tea gardens covering an area of over 7,482.27 hectares as of 2015-16. Due to large availability of land along with appropriate climatic conditions, a gradual boost to the tea production in the state has been witnessed. In 2016-17, tea production in the state stood at 10.5 million kg.

A unique harmonious blend of 3 traditions (Tribal, Bengali and Manipuri weaving) can be seen in Tripura’s handicrafts. The state is known for its unique cane and bamboo handicrafts.

Tripura has about 266 medicinal plants, 379 species of trees, 581 herbs, 320 shrubs, 165 climbers, 16 climbing shrubs, 35 ferns and 45 epiphytes. The tropical climatic conditions in the state supports the flourishing growth of various types of medicinal plants and other forest resources scattered all over the state.


38

INTRODUCTION

39

The state has favorable climatic conditions for cultivation of various fruit and horticultural crops. The state’s pineapples and oranges are known for their unique flavors and organic nature. It has set up a modern food park near Agartala to boost growth in the food processing sector and an agri-export zone for pineapples. The state also has potential in the meat-pro-cessing sector. It has around 55 food processing units and one operational mega food park, which is located at Bodhjungnagar, West Tripura.

The following industrial infrastructure is being created at Bodjungnagar, West Tripura in the state which is expected to give a huge fillip to the export activities in the state.

NAME NODAL AGENCY LAND FACILITIES BEING CREATED

Rubber Park (Completed)

TIDC Ltd. 58.819 Acres Internal & External Road Network, Developed

Plots and Shed, Power, Water and Gas

Supply, Common Effluent Treatment Plant,

Telecom, Boundary Wall, Testing Lab,

Sewage and Drainage, Security Guard etc.

Food Park (Implemented)

TIDC Ltd. 30 Acres 1500 MT Cold Storage, Warehouse, Quality

Control Laboratory, Sorting, Grading &

Packaging Unit, Bottle Manufacturing Unit,

Test House.

Export Promotion Park (Implemented)

TIDC Ltd. 126.12 Acres Administrative Block, Internal & External

Road Network, Developed Plot & Shed,

Power, Gas & Water Supply, Telecom,

Boundary Wall, Sewage and Drainage,

Security Guard etc.

Bamboo Park

(Implemented)

TIDC Ltd. 135 Acres Black Top Road, Common Facility Center,

Sub-Station etc.

Tripura has vast natural gas reserves. The gas is available in a non-associate form, with high methane content of about 97.0per cent. Concessional gas-pricing and vast reserves offer potential for setting up industries in the sector. Natural gas is available in the Baramura hills and Rokhia. Natural gas-based thermal plants have been set up in both places. Natural gas is presently used mainly for generating power and to some extent in domestic, industrial, commercial and transport sectors. Emphasis would be given for setting up industries (e.g., ammonia, urea, methanol and methanol-based petrochemical industries), where gas would be utilized as feedstock. The availability of superior quality natural gas, at concessional price, offers a great opportunity to prospective investors to set up gas-based industrial units, using natural gas as feedstock, like urea, methanol, PVC and other projects. Besides this, natural gas can also be utilized as a cheaper source of energy for various energy-intensive industrial projects.

Scope of the StudyThe study is part of the project jointly funded by UNDP and EXIM Bank of India which seeks to strengthen MSME units in the region by leveraging all opportunities emerging from the Govern-ment of India’s Act East Policy, as well as growing recognition of the long term advantages of export-led growth in alleviating poverty and sustainable development. The project seeks to strengthen existing MSMEs, as well as encourage first generation entrepreneurs to set up green-field projects and support them to get off the ground. This report supports the project at two levels – firstly at the level of strategic insights into what are the entry points and how the resource potential of the region both material and human could be marshalled to make this possible; secondly the report seeks to draw up the inventory of resources available in the region and provide the blueprint of stage wise growth of MSMEs. The report draws on a wealth of secondary resources – government reports, newspaper articles, academic research outputs to achieve the twin objectives. The report also contains an institutional analysis of the MSME, export ecosystem and financial infrastructure.


40

INTRODUCTION

41

The study is part of the project jointly funded by UNDP and EXIM Bank of India which seeks to strengthen MSME units in the region by leveraging all opportunities emerging from the Govern-ment of India’s Act East Policy, as well as growing recognition of the long term advantages of export-led growth in alleviating poverty and sustainable development. The project seeks to strengthen existing MSMEs, as well as encourage first generation entrepreneurs to set up green-field projects and support them to get off the ground. This report supports the project at two levels – firstly at the level of strategic insights into what are the entry points and how the resource potential of the region both material and human could be marshalled to make this possible; secondly the report seeks to draw up the inventory of resources available in the region and provide the blueprint of stage wise growth of MSMEs. The report draws on a wealth of secondary resources – government reports, newspaper articles, academic research outputs to achieve the twin objectives. The report also contains an institutional analysis of the MSME, export ecosystem and financial infrastructure.

SCOPE OF THE STUDY

The potential remains untapped due to lack of connectivity and low level of infrastructure growth

EXPORT POTENTIALOF THE REGION


4 4

EXPORT POTENTIAL OF THE REGION

45

2.1 Introduction

This region is bountifully endowed with bio-diversity, hydro-potential, oil and gas, coal, lime-stone and other mineral resources. It is also rich in forest resources which occupy nearly half of the total area in the region. Forest resources include rubber, cane and bamboo timber, hardwood, medical plants and herbs. Even then industrial development in the NEI does not seem to be significant. Only a negligible percentage of the country’s total number of facto-ries is in the region. Most of these are engaged in manufacturing of food products, wood and wood-based items and non-metallic mineral products. Tea and petroleum are the two important industries and both these industries play a vital role in NEI’s economy. The other large and medium-scale industries include cement, paper, sugar, jute, fertilizers and spin-ning. In medium and small-scale sector plywood, handicraft and handlooms are occupying a significant share. The region shares only 2% of the border with the mainland of the country, and more than 98% is linked with the international border i.e. Bangladesh, Bhutan, China, Myanmar and Nepal. This feature makes export from the region very attractive. However, the potential remains untapped due to a number of factors like lack of connectivity and low level of infrastructure growth which are discussed in detail elsewhere in this report.

2.2 Analysis of Current Exports from the Region

The table below provides a year wise break-up of the exports from the 8 states of the North Eastern region during the period April 2017-July 2018. Assam and Meghalaya together account for 94%-98% of the exports from the region.

(USD million)

State/Year 2014-15 2015-16 2016-17 2017-18 2018-19*

Assam 340.79 395.55 430.03 382.35 154.87

Meghalaya 86.39 102.34 102.14 85.13 28.12

Arunachal Pradesh 6.28 6.65 4.93 5.32 1.56

Tripura 5.92 1.26 1.42 2.33 0.77

Sikkim 3.91 2.93 4.91 13.96 4.30

Nagaland 1.64 4.37 0.74 3.92 1.55

Mizoram 0.27 1.44 0.03 1.07 0.90

Manipur 0.19 0.16 1.06 1.33 2.28

All North East 445.39 514.70 545.26 495.41 194.35

All India 310352.00 262290.00 275852.00 303376.00 164021.00

*Data upto July 2018 for the year 2018-19



46

The exports registered an increase of 16% during 2015-16 over the previous period. This increase was tempered to 6% over the year 2016-17 and fell 9% during 2017-18. During the first four months from current year, the exports from the region have reached 40% of the previous year level. The export growth does not show any definite pattern of upward increase over the last 5 year period.

Year-wise Trend of Exports from the North East Region


47

Export trends disaggregated at the state level are given below in the two charts below. The first chart looks at the year wise movement of two major states – Assam and Meghalaya. The second chart looks at the remaining 6 states in the region. Manipur and Sikkim are witnessing an uptake in exports during the last two years.

Export Trends I

Export Trends II


48

For the period April 2017- July 2018, the graph below provides a state wise disaggregated figure of percentage-wise distribution of exports from the region. Assam and Meghalaya together constitute 94.45% of exports from the region, followed by Sikkim (2.78%), Arunachal Pradesh (1.01%), Nagaland, Tripura, Manipur, Mizoram contribute less than 1% each of the export basket from the region.

If we look at the principal commodity wise disaggregated picture for the same period, we find that tea accounts for 65% of the export by value followed by Coal, Coke & Briquettes (14%). Bulk Mineral (8%), Petroleum (4%), Drug Formulations (2%) and Cement (2%). Spices, fresh fruits and vegetables account for less than 1% each, despite the region housing some unique varieties which have a huge demand outside the region.

State-wise Export Apr 17 - July 18

Commodity-wise Exports


49

Our analysis revealed that during the period April 2017- July 2018, the Kolkata Port was the most preferred Port of Export for exporters in the region accounting for more than 54% of the export cargo by value. This was followed by Guwahati Air route at 14%. Both Borsorah and Sheuabazar accounted for 8% of the export shipments while Jaigaon (6%); Panitanki (5%), Raxaul (4%) and Hatisar and Kolkata Air reported 1% each.

A month wise analysis of the exports from the region reveals that the exports did not follow any cyclical pattern over the 16 month period and fluctuated between 4% and 8% for the region. April 2017 was a good month clocking 8 % exports while April 2018 saw the lowest outflow of 4%.

Port-wise Exports

Month-wise Distribution of Exports


50

2.3 State-wise Export Analysis

MIZORAM

The state of Mizoram exported 21 principal commodities worth USD 1.97 million to 14 countries from 12 ports. Bulk of the exports were made from Karimganj (54%) followed by Panitanki (26%). DPCC Mumbai, Kolkata and Kochi Airports were the other points of export for the state. Spices form the single largest bulk of export at 39% whereas coal, coke and briquette were the second most important items in the export basket of the state at 15%. Precious stones and fresh fruits at 9% each and petroleum products (7%) were the other significant exports from the state.

Mizoram Port-wise Exports

1.97 Million

12

14COUNTRIES

21COMMODITIESPORTS

USD


51

An analysis of the destinations of the state exports reveal that 55% of the exports are to Bangladesh which is consistent with the earlier finding that Karimganj is the most significant Port of Export for Mizoram. Nepal imports the second largest consignment from the state (27%) through the Panitanki outpost on the Indo Nepal Border. Thailand, Russia, USA and Myanmar are the other important destinations for the exports from the state.

Mizoram Destination-wise Breakup

Mizoram Principal Commodity Exports


52

ASSAM

For the period April 2017 to July 2018, Assam-based exporters dispatched goods valued at USD 537.22 million to 110 countries through 37 ports of export. The basket of export commodities comprised 111 items for the state. An analysis of port of exports for the state of Assam reveals that more than 65% of the exports were routed through Kolkata Ports. ICD Guwahati was next in the list of favored ports with a traffic of 18 %. Jaigaon (6%), Panitanki (5%), Raxaul Land Border (3%) were the other ports of export of significance for the state.

Assam Port-wise Exports

537.22 Million

37

110COUNTRIES

111COMMODITIESPORTS

USD


53Iran and Russia with 21% and 14% of export by value were the top destinations for Assam’s exports, followed by Nepal, United Arab Emirates and United Kingdom with 9% each. Bhutan, which shares a 267 kilometer long border with the state, imported 8% of Assam’s merchan-dise. Germany(3%), China (3%), Kazakhstan (2%), Egypt (2%) were some other significant export destination for the state.

Tea accounted for close to 80% for the export by value followed by coal, coke and briquette (7%) and petroleum products (5%). Cement, cosmetics, agrochemicals, sesame seeds accounted for 1% each of the state’s export basket.

Assam Destination-wise Breakup

Assam Principal Commodity Exports


5 4

SIKKIM

The state of Sikkim exported 65 commodities to 64 countries during the period April 2017-July 2018. The exporters used 22 ports for this and the total value of goods exported were USD 18.26 million. Raxaul Land Border dominated the export route for the state’s exporters, as 54% of the exports by value were routed through it to Nepal. Panitanki (15%), Jaigaon (9%), Kolkata Sea (6%) and Nhava Seva (6%) were some of the other important ports of export for the state.

Sikkim Port-wise Exports

18.26 Million

22

64COUNTRIES

65COMMODITIESPORTS

USD


55

Neighbouring Nepal was the single most important destination for the state accounting for 70% of the export from the state, which was routed largely through the Raxaul and Panitanki Land Borders. USA came a distant second with 8% export share. Bangladesh (1.4%), Sri Lanka (1%), Kazakhstan and Peru (both 0.5% each), Oman and Mayanmar (both 0.4% each) were some of the other destinations for Sikkim’s exports.

Sikkim Destination-wise Breakup

Sikkim Principal Commodity Exports

Drugs and formulations were the bulk of exports from the state and comprised 60% of the total exports. Cereal preparations (9%), processed food (7%), coal, coke and briquette (6%), petroleum (4%) and medical instruments (2%) were some of the other important export commodities from the state.


56

MEGHALAYA

Meghalaya is the second largest exporter state from the region after Assam. It exported 54 commodities worth USD 113 million to 27 countries from 23 ports of India. Borosorah, Sheuabazar together account for 87% of the export from the state.

Meghalaya Port-wise Exports

113.24 Million

23

27COUNTRIES

54COMMODITIESPORTS

USD


57

Bangladesh is the single largest importer of the products Bangladesh close to a 94% share. Nepal is a distant second with 2% share of exports from the state. Exports to 25 countries account for the balance 4% exports from the state.

Meghalaya Destination-wise Breakup

Meghalaya Principal Commodity Exports

Coal, coke and briquettes, bulk mineral and ores comprise 94% of the exports by value. Cement, clinkers and asbestos, processed minerals, and iron and steel are some of the other major commodities for exports. Spices, fresh fruits and vegetables are negligible in terms of their share in exports.


58

ARUNACHAL PRADESH

Arunachal Pradesh, which is the largest state in terms of area, does not contribute to the exports from the region in any significant way. The export base is fairly diversified and the ports of entry also do not show any particular skew in favor of any specific port or destination. 68 commodities worth USD 6.88 million were exported out of 38 ports to 40 countries. Inland Container Depot (ICD) Agra, ICD Loni (both north India based export hubs) and Kolkata Sea Port and Panitanki are the four main ports of export which account for 56% of the exports from the state. The remaining 34 ports account for 44% of the exports from the state.

Arunachal Pradesh Port-wise Exports

6.88 Million

38

40COUNTRIES

68COMMODITIESPORTS

USD


5935% of the export consigments are concentrated in three countries, namely – Bangladesh, Nepal and USA. The remaining 65% of exports are directed towards 37 countries including Pakistan,Algeria and Malaysia.

Arunachal Pradesh Destination-wise Breakup

Arunachal Pradesh Principal Commodity Exports

Iron and steel products, buffalo meat and leather footwear account for 41% of exports from the state in terms of principal commodities. The remaining 65 commodities account for 59% of exports from the state.


60

NAGALAND

Nagaland exports goods worth USD 5.46 million to 23 countries through 15 ports of India. Its export basket comprises 47 commodities.

Kolkata Airport is the main port of export for the state which alone accounts for 47% of the exports from the state to various destinations. Jaigaon at 31% is the second most import-ant port of exit for the state. The remaining traffic is distributed through 13 ports including Panitanki, Krishnapatnam, Nhava Sheva and Delhi Airport, to name a few.

Nagaland Port-wise Breakup

5.46 Million

15

23COUNTRIES

47COMMODITIESPORTS

USD


61Nagalands exports were sought after in Italy, Bhutan, Tunisia, Nepal and China. These were some of the countries which imported from the state of Nagaland.

Nagaland Top 5 Export Destinations

Nagaland Principal Commodity Exports

Nagaland exported human hair products worth USD 2.59 million out of the state, accounting for 47% of the total export merchandise. Iron and steel products, electronic components, granite, electronic instruments, coal, coke and briquettes were some of the other commod-ities exported from the state.


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TRIPURA

Merchandise from the state of Tripura is exported to more than 22 countries across the world through 18 ports in India. The export basket of the state comprises 35 commodities valued at USD 3.13 million. 58% of the export is routed through three ports of export – Vishakhapatnam Sea Port, Kolkata Sea Port and Bangalore. Closer home, Petrapole and Panitanki together account for 28% of the exports from the state. The remaining 14% of the export is handled by 13 ports of export.

Tripura Port-wise Exports

3.13 Million

18

22COUNTRIES

35COMMODITIESPORTS

USD


63Destinations of exports from the state are quite broadly distributed across countries – Bangla-desh, Nepal, Nigeria, and Brazil each import between 15-11% of the state’s export, totalling to 50% of the state’s export volumes. Iran and Spain come next in terms of volumes at 8% and 7% respectively. Poland, USA, Vietnam account for 4% each of the state’s exports. The remaining 23% of exports are sent to 13 countries.

Tripura Destination-wise Breakup

Tripura Commodity-wise Breakup

Iron and steel products, cotton readymade garments, fresh vegetables and tea are some of the important items of the state’s export basket comprising 61% of exports by value. Rice, spices, readymade garments of man-made fabrics, cement and clinker are some of the other key exports from the state.


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MANIPUR

Manipur exports 27 commodites to 18 countries through 13 ports of export. The value of exports from Manipur are USD 3.61 million. 66% of the exports by value originating from Manipur are dispatched through the Delhi Airport. Panitanki (14%), Raxaul (8%), Diamond Plaza Customs Clearance Center (DPCC), Mumbai (7%) are some of the other ports for the state’s export.

Manipur Port-wise Exports

3.61 Million

13

18COUNTRIES

27COMMODITIESPORTS

USD


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China accounts for 65% of the exports from the state followed by 22% for United Arab Emir-ates. Nepal absorbs 7% of the exports from the state.Together, these three nations account for 94% of the state’s exports. Ivory Coast, the USA and 13 other countries account for the balance 6% of the exports from the state.

Manipur Top 5 Export Destinations

Manipur Principal Commodity Exports

Medical and surgical equipment and petroleum products together account for 78% of the state’s exports. Gold jewelry, coal, miscellaneous processed items, handifcrafts and hand-looms are some of the other important exports from the state.


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2.3 Granular Analysis of Export Potential of Select Commodities

The North Eastern region is well known for the quality and quantity of its spices and horti-cultural produce. The table below encapsulates the marketable surplus of the commodities produced in the region. The surplus ranges between 82% to 95% of the total output in the region. This provides a clear cut case for exporting value added products made out of these commodities. However, in order to achieve this, a number of measures need to be in place for optimal utilization of this resource.

Marketable Surplus in Horticulture Crops Grown in the NER

PRODUCT O/P (MT) SURPLUS

Ginger 355,454 86.1%

Lemon 215,287 82.1%

Orange 589,736 85.3%

Pineapple 777,144 95.0%

Jackfruit 492,898 83.3%

Litchi 78,847 95.4%

Grapes 23,980 83.1%

Honey 1,663 86.3%

The chart above pictorially represents the 10 horticultural products for which Geographical Indicator has been obtained. It is clear that each state has at least one item for which GI has been obtained. This is an important first step for capturing the export market. Unfortunately, due to supply chain bottlenecks, the potential for exporting these commodities, both in raw as well as processed form, remains underutilized. In the remaining part of the chapter, we will try to understand the reasons for this and suggest a roadmap for removing the bottlenecks.

Arunachal Pradesh Arunachal Orange

Assam Karbi Anglong Ginger, Tezpur Lichi

Manipur Kachai Lemon

Meghalaya Memang Narang, Khasi Mandarin

Mizoram Mizo Chilli

Nagaland Naga Tree Tomato

Sikkim Large Cardamom

Tripura Tripura Queen Pineapple

GI Registration by NERAMAC


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The table below gives a snapshot of horticultural exports that are handled through the land custom stations in the region, as well as the destination countries. A quick analysis of the export data reveals a preponderance of Bangladesh as the key export destination for all the primary products which feed not only the domestic market, but are possibly processed and rerouted to global markets. This results in a loss of export margins which rightfully belongs to the primary producers of the NER in India.

State Land Custom Station Partner Country Key Commodities

Assam Hatisar Bhutan Rice, Maize

Mankachar Bangladesh Ginger

Sutarkandi Ginger, Orange, Apple

Karimganj Ginger, Orange

Manipur Moreh Myanmar Wheat flour, dry chilli, dry grapes

Meghalaya Mahendraganj Bangladesh Ginger, Betel nut

Ghasuapara Ginger

Dawki Tomato, Betel

Leaves, Ginger

Tripura Old Ragnabazar Bangladesh Orange

Manu Apple

Agartala Vegetable seeds

The graphical representation below explains the current situation and indicates the direction in which India needs to move if we are to realize our potential for export growth and inclusive growth in the region.

Higher returnsHigh demand for premium& value added products

Limited returnsMarket ConstraintsLimited demand for

premium

Exports from IndiaBangladesh& South Asia

Premium EU, US &Middle East markets


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If we have to creatively utilize the rich resource base of the region’s biological reserves, we need to transform the entire value chain associated with the farm to fork movement of these primary products. As represented in the chart below, the intervention has to begin at the input stage and our emphasis has to be on shifting to a completely organic production system. This commands a premium in international markets and can be achieved with minimum expenditure on certification and accreditation. Rural supply chains have to be energized and aggregation has to be done in a effective and efficient manner to retain the competitiveness of our commodities. Leveraging on the massive central and state government outlays, we need to process the raw produce into trendy final products which command high premiums and are used in many countries. Processing also increases the shelf life of the produce overcoming its perishable nature. This value addition is labor intensive, and can be done at a decentral-ized level by adhering to the global sanitary and phytosanitary norms. Finding new markets and establishing our leadership in terms of market share is not easy, and we would need to ally with large global players in every value chain as a first step. As we grow our markets, we would also get an opportunity to train our workforce on the immense opportunites that open up as a result of the global linkages and forward linkages in the value chain.

Shift in Paradigm for Horticulture

Procurement and Storage

Processing

Capacity Building and Skill Development

Market and Customers

Leveraging Organic Production

Enhancing Rural Supply Chains

Optimal Utilization of Surplus

Empowering Large Labour Pool

Quality and Outreach to New Markets

Input and Farming


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SPICES

North East India holds a special position on the global map owing to the quality of its spices from the region, which have won wide acclaim due to the quality as well as their health bene-fits. Spices in the North East have been grown using nature friendly methods for ages, as the region is blessed with tropical rain forests and rich soil, which are favorable for organic farming. In recent years, the Spices Board of India has been undertaking a series of concerted efforts to increase the cultivation of exotic spices from the region and also ensure that they are able to penetrate a wider market. Each of the states in the North East has a good contri-bution in producing organic spices.

State Spices

Arunachal Pradesh Ginger, Large Cardamom, Turmeric, Bayleaf

Assam Turmeric, Black Pepper, Ginger

Manipur Turmeric, Ginger, Chillies, Maroi Nakup

Mizoram Turmeric, Black Pepper, Ginger, Bird’s Eye Chilli

Meghalaya Turmeric, Black Pepper, Ginger, Large Cardamom, Chillies

Nagaland King Chilli, Garlic, Ginger, Black Pepper

Sikkim Turmeric, Ginger, Large Cardamom, Chillies

Tripura Turmeric, Black Pepper, Ginger

During the 16 month period April 2017- July 2018, Assam, Meghalaya, Mizoram together accounted for 96 % of the spices exported from the region. Arunachal Pradesh, Manipur and Tripura together had an export share of 6% in the same period.

Spice Exports State-wise Breakup


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If we analyse the export data in terms of destination countries, Bangladesh emerges as a clear leader receiving 59% of the total export from the region. USA and Nepal follow behind with 18% and 15% share.

North East Spice Export Destination


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GINGER

Ginger is an important spice crop and is cultivated in almost all the states of the country. However, the North Eastern Region is one among the highest ginger productivity areas in the world. The agro-climatic conditions of North East India, characterized by warm and humid summers with abundant rainfall and cool winters are favorable for ginger cultivation. The North Eastern States of Arunachal Pradesh, Mizoram, Sikkim, Meghalaya, Manipur, Tripura and Nagaland account for 24.6% of area under ginger and 24.1% of India’s ginger production. The ginger produced in the NER also has higher oil and oleoresin content, making it one of the best in quality. The traditional system of ginger cultivation in the North East is jhum system or shifting cultivation, which is prevalent in all states except Sikkim. Maran and Nadia are the most popular varieties of ginger grown in Assam. Major identified production clusters are Sonitpur, Udalguri, Golaghat, Tinsukia, Karbi Anglong and North Cachar Hills.

Major Production Belts in SikkimMajor production belts in all four districts of Sikkim are as below: y North Sikkim: Lower Rongong, Lingdok, Nampatam, Nadey, Passingdong, Lum, Gor,

Sangtok y East Sikkim: Whole area y South Sikkim: Poklok, Kamrang, Namchi, Singithang, Namthang, Rateypani, Melli,

Barfung, Rangyang, Ynagyang, Temi, Namphing y West Sikkim: Tikjyek, Lungik, Rathang, Tikpur, Ambotey, Lower Buriokhop

Marketing Channel of Ginger in Meghalaya

Farmers

Farmers

Aggregators

Aggregators Markets in Shillong

Markets in Guwahati/Silchar/ Kolkata

Contractor/ Trader

Market in Guwahati

Marketing Channel of Ginger in Assam

In Meghalaya, ginger is cultivated on slopes. The most popular varieties under cultivation are Nadia and Vara in the identified major cluster of Ri Bhoi, East Garo Hills and West Garo Hills. Nadia is popular due to its low fibre content.


74 Ginger is one of the major spice crops in Sikkim which contributes 14 percent to the total ginger production of the North Eastern Region. Local varieties Bhaisey, Majaole and Gurubathaney etc. are used for cultivation.


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Ginger is grown in all four districts upto 6000 mt. altitude, hence production is less in the North District which has higher altitudes. It is one of the major spice crops in the region which contributes 14 percent to the total ginger production of the North Eastern Region. Local varieties Bhaisey, Majaole and Gurubathaney etc. are used for cultivation. Farmers use the seed rhizomes preserved in the last season for the sowing purpose. The farmer either sells the produce to the aggregator at the village level or to the wholesaler or trader from Siliguri or Kolkata. The post-harvest losses during transportation to Gangtok is about 1 percent only, but when transported to distant markets of Siliguri and Kolkata, the handling loss ranges upto 2-3 percent. At the wholesalers and retailers level, this loss is 2 percent. Glut is also a major issue with ginger. Farmers have to leave the ginger in the field itself due to very low price offered and they use it as seed for the next season.

Productivity of Ginger in the North East

STATE PRODUCTIVITY (MT/HA)

Arunachal Pradesh 5.5

Assam 11.57

Manipur 6.88

Meghalaya 5.79

Mizoram 4.92

Nagaland 6.9

Sikkim 5.39

Source: NHB and State Horticulture Departments

Ginger is a widely grown spice all over North Eastern Region and supplied to other major markets in the country. Assam is the largest producer and trader of ginger from the NER. Karbi Anglong in Assam has stabilized ginger production and trading across the value chain in the district and beyond. More than 1500 small and marginal tribal farmers are a part of Ginger Growers’ Co-operative Marketing Federation (Gin-Fed), an initiative of Rashtriya Sam Vikas Yojana. Gin-Fed supplies directly to Azadpur Mandi, New Delhi. Farmers, through middle-men, were getting as low as INR 3-4 per kg, but Gin-Fed minimized this distress selling and facilitated a fair price. Farmer price ranges from INR 6-35/kg comparable to national mandis (markets). It also arranges the procurement, primary processing, marketing information, obtaining order and shipment.

Farmers under Gin-Fed have been provided ‘G-card’ which provides many benefits including easy access to credit facility from public sector banks which have a tie up with Gin-Fed. Gin-Fed charges only for handling at INR 1.50 per kg and administrative cost at INR 0.30-1.00 per kg. Whatever extra profit is earned from the business goes to the shareholder farmers. Gin-Fed has tie-ups with major traders in India such as ITC, Srestha Bio Products, NAFED, Stacon, RayFarm and Ace Agro. They are approached by leading firms in Japan and South Korea for organic ginger export, as it has more oil content. Though ginger is grown in naturally organic condition, Gin-Fed is in the process of certification of the fields to facilitate direct export to European countries. The Railways have provided one parcel van facility to Gin-Fed to transport directly to New Delhi with charges as low as 50 paisa per kg. which compares favorably with road transport costs INR 4-5 per kg.


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TURMERIC

Turmeric is the second major spice crop in the NER which is also grown in all eight North Eastern states. Turmeric is the dried rhizome of Curcuma Longa L. which is used as a condi-ment, as a flavoring and coloring agent, and is a principal ingredient in Indian kitchens as curry powder. Turmeric derives its taste, aroma and color from its active ingredient ‘curcumin’ which is the principal phenol responsible for the yellow color and medicinal characteristics of turmeric. The higher the curcumin content, the better the turmeric variety.

AssamKamrup, Barpeta, Sonitpur, Nagaon, Baksa, Golaghat, Lakhimpur and Karbi Anglong are major identified production clusters for Assam. Aamda and Lakadang are the identified varieties grown by the farmers.

MeghalayaThe major production clusters that have been identified in Meghalaya are Jaintia Hills and West Garo Hills. Lakadang is the main popular variety, which is a much sought after variety by the extraction industry due to its high curcumin content (<5.5%). The sowing of turmeric is carried out on beds on slopes. Usually, farmers use their own seeds (rhizomes) preserved from the previous season’s crop for cultivation purpose.

MizoramIIn Mizoram, Reiek village in Mamit district is very famous for turmeric cultivation. Mamit is the largest turmeric producing district in Mizoram. Other identified clusters are Saiha, Champhai, Kolasib and Serchhip. The varieties used are Lakadong and RCT-I.

Marketing Channels

1. Farmers-Middleman (village level)-local wholesale markets in Mizoram-retailers-con-sumers

2. Farmers-Local wholesale markets in Mizoram-retailers-consumers

3. Farmers-Traders/contractors (from neighbouring districts of Assam, Silchar, Karimganj etc.)-wholesale markets-retailers-consumers

In Mizoram, Mamit District is the largest turmeric producer. The area under turmeric culti-vation is more than any other spice crop. Reiek village in Reiek block of Mamit (12 km from Aizawl) is famous for turmeric cultivation. In Reiek, they have ‘Turmeric Growing Farmers’ Society’ which sells turmeric rhizome to the State Horticulture Department and the depart-ment further supplies the rhizome all over the state as seed material to farmers. Farmers generally grow Megha and Lakadong varieties. Local turmeric rhizome productivity is 10 MT/ha. Turmeric grown here is organic by nature, as farmers do not use any chemical input. Farmers are very laborious and cultivate as per training provided by the District Horticulture Department. Farmers in the Reiek village sell rhizomes, cured ginger and ginger powder as well. Traders from Aizawl and outside Mizoram visit the village for procurement of spices such as ginger, turmeric and Bird’s Eye chilli. There is a small scale grinding machine where a group of farmers do the grinding. By forming the growers’ society, farmers of the village have acquired the ability to negotiate the price with traders. Turmeric rhizome is procured by the Horticulture Department at INR 20-25 per kg, while cured turmeric is sold by the farmers at INR 60-80 per kg and powder at INR 100-150 per kg. Traders from Assam (mainly from Cachar and Karimganj) buy from here and sell to markets in Assam. But more than 50% of produced turmeric is procured by the the Horticulture Department.


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Productivity of Turmeric

STATE PRODUCTIVITY (MT/HA)

Assam 0.7

Manipur 11.34

Meghalaya 5.06

Mizoram 5.1

Sikkim 5.37

Source: NHB and State Horticulture Departments

NAGA CHILLI

The Naga Chilli is the traditional food item of the Naga community. It is believed to have originated in Nagaland and the State Government has obtained GI rights for the product in 2008. It has a distinct taste and pungency and is used in many forms - fresh, dried, powdered and pickled. Major identified clusters are Kohima, Peren and Dimapur.

LARGE CARDAMOM

Large cardamom is a perennial herbaceous plant with subterranean rhizomes that give rise to leafy shoot and panicles. It is believed to be the native crop of Sikkim. The cardamom capsules are categorized as high value spice crops in the country and have multiple domestic uses. India is the largest producer of large cardamom with almost 54 percent share in world production; and out of this Sikkim contributes up to 88 percent of India’s production. Large cardamom grows well under the shade of forest trees at altitudes ranging from 1000-2000 metres with rainfall ranging from 3000-3500 mm per annum.

SikkimLarge cardamom is the main cash crop of Sikkim, being cultivated in an area of 15,020 ha in all the four districts of the state. Two major producing clusters are North and East Sikkim. There are five popular cultivars being grown in Sikkim i.e, Ramsey, Sawney, Golsey, Varlangey and Seremna. The propagation of large cardamom is through seeds and suckers. Seeds are generally sown September-October.


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FRUITS

KHASI MANDARIN

As per a recent estimate, Khasi mandarins from the NER contributed 3.60 Lakh tons (10%) to the total of 34.61 tons of oranges produced in India. Majority of the produce from the NER is exported to Bangladesh where it is either processed or fancy-packed and reroutes itself into the global markets. The remaining produce secures its place in the domestic market from cities like Imphal, Silchar, Shillong, Guwahati, Gangtok, Kolkata, and Delhi.

Key Orange/ Mandarin Producing Districts in the NER

Arunachal Pradesh Lohit, Roing, Upper Siang, West Siang, East Siang

Assam N.C. Hills, Kamrup (Rural), Tinsukia, Kamrup (Metro), Karbi Anglong

Manipur Tamenglong, Churchandpur

Meghalaya East Khasi Hills, Jaintia Hills, West Khasi Hills, West Garo Hills

Mizoram Serchhip, Aizawl, and Champhai

Nagaland Mokukchung, Wokha, Kohima, Kiphire

Sikkim East Sikkim, West Sikkim, South Sikkim

Tripura North district, Dhalai, Gomati district , West district

There is a lot of scope for the MSME sector in value addition through a number of processes to prepare the following products which can fetch a higher return in the markets across the world:

Candied Orange Peel: Orange peel from the processing industries is processed to candied orange peel by shredding and blanching and cooking in sugar syrup. This is used further in fruit preserves, jams and bakery products.

Dried Orange Peel: Shredded and blanched orange peel is dried in hot air. The dried peel is used as such or powdered in applications like traditional medicine, cosmetics.

Jams and Marmalades: Jams are processed by cooking peeled, blanched and pulped orange fruits along with other fruit pulp. Marmalades are processed by adding cooked orange peel shreds.

Orange Juice Concentrate: Orange juice concentrate is produced by pulping sound, mature, peeled oranges. The extracted juice is concentrated by means of vacuum evaporation to increase the soluble solids. The concentrated juice is packed aseptically in bag in box/ drum assembly and stored at ambient temperature.

IQF Orange Pieces: Peeled oranges are subjected to caustic boiling and neutralization to remove the septum. The obtained segments are subjected to individual quick freezing by blast freezing. The frozen segments are packed and stored in clod chain. These are further used in dairy, beverages and bakery products.

Frozen Pulp: Pulp obtained from oranges is subjected to quick freezing in order to retain its flavor profile. This is further used in the production of beverages and dairy products.

Orange Oil: Orange oil is obtained by subjecting peel and other fractions of oranges to solvent extraction/steam distillation and fractionation. This is further used as an ingredient in the flavor industry and perfumeries.


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PINEAPPLE

Pineapple is one of the important fruits that is grown in India. While the fresh fruit is used for table purpose, juice and canned slices are popular as preserves and are traded in the international markets. The plant is a perennial herb with grows to a height of 80-90 cms. and has an economic life of 5-7 years.

Arunachal Pradesh

Papum Pare, West Siang, Upper Subansiri, East Kameng, Lower Subansiri

Assam Cachar, Kamrup, Sonitpur, Karbi Anglong and North Cachar Hills

Manipur Senapati, Thoubal, Churachandpur

Mizoram Aizawl, Serchhip

Nagaland Dimapur, Peren, Mokokchung, Wokha, Kohima

Tripura Dhalai, South, North, Unakoti, West, Gomati

A lot of pineapples that are produced in the region get wasted due to the perishable nature of the fruits and lack of processing facilities. Some of these value added products of pineapple can be processed by basic training. Though large quantities of pineapple are produced in the NER, exports from the region are minimal. Only small quantities of pineapple are exported even to the neighboring nations of Bangladesh and Myanmar. In general, pineapple is exported in canned or tinned form specifically to the Middle East and the EU markets. Nupui Food Processing in Kumarighat, Tripura is currently selling 1.5 lakh cans per annum to markets in the EU specifically to Italy. Pineapple India is another exporter from the region involved in the exports of canned pineapple and frozen pineapple juice concentrate.

Ready-to-serve beverages/squashes: Ready-to-serve beverages/squashes are manufactured from ripened and wholesome pineapples by peeling, churning and blending the fruit to extract the pineapple juice and is pasteurized while processing; and no preservatives are used. The packaging and preservation is done in line with pre-defined guidelines set by the certification authorities. Shelf life is 24 months under ideal conditions.

Canned pineapple/Titbits: Canned pineapple/titbits are manufactured from mature and sound pineapples by peeling and cutting them to the desired size as per the standards, blanching and by adding sugar syrup and thermally processing them in lacquered cans. These are further used in desserts, dairy products, culinary applications, bakery and confectionery products.

Candied pineapple pieces: Peeled and trimmed pineapple dices are treated with sugar syrup and subjected to controlled drying.

Pineapple juice concentrate: Mature and sound pineapples are processed into juice which is then further concentrated in vacuum evaporators to a solid content of 65° Brix and packed in aseptic packaging systems like bag in drum/box. This product can be stored at an ambient temperature up to 18 months. It is further used in beverage applications.


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KIWI

Kiwi fruit, also known as Chinese gooseberry, with its unique flavor and soft texture, is gaining prominence as an exotic fruit across the world. It is a fair source of vitamins C, E and A, and minerals like potassium, phosphorous, magnesium and copper. It is an ideal snack for weight watchers owing to its low calories and delicate flavor. It is preferred to be consumed as raw fruit or is mostly processed into desserts or beverages. Kiwi plant is a perennial twiner with complex production practices and climate requirements than regular horticultural crops. In India, kiwi is produced in the North Eastern states of Arunachal Pradesh, Nagaland, Mizoram and Sikkim. Arunachal Pradesh is the highest producer of kiwi in India producing around 6000 MT followed by Nagaland which is producing 2400 MT.

Key Kiwi Producing Districts in the NER

Dried/Candied Kiwi: Dried kiwi slices are processed by coating the cleaned, peeled and sliced kiwis with sugar syrup and then subjecting them to hot air or vacuum drying. The dried slices are consumed as a snack or used in breakfast cereals, and garnishing in bakery products.

Individual Quick Frozen (IQF) Kiwi Slices: Cleaned, peeled, blanched and sliced kiwis are subjected to quick freezing by a cryogenic dip or by blast freezing. IQF kiwi slices are used in dairy foods, confectionery, and desserts. Complete cold chain infrastructure is required to process the product.

Kiwi Juice Concentrate: After cleaning and peeling, juice is extracted from kiwis and the seeds are separated. The extracted juice is concentrated by means of vacuum evaporation and the solids content is raised from 10° to 65° Brix. Juice concentrate is a very stable product with a long shelf life that can be stored at ambient temperature and can be made from culled fruits.

Nearly 70% of the kiwi produced in the North East is wasted annually due to lack of storage and packaging facilities. While a great deal of attention is paid to achieve the area expansion and rejuvenation of orchards in the region, apathy on the creation of market linkages and post-harvest facilities are making the good work done in strengthening the production futile.

ARUNACHAL PRADESH

NAGALAND

Zunheboto, PhekWest Kameng, Lower Subansiri


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LITCHI

Assam and Tripura together contribute about 13 % of India’s litchi production. In 2014-15, approximately 49,000 MT of litchi is produced from a cropped area of 5440 hectares in Assam and approximately 20,500 MT from 3900 hectares in Tripura. The Tezpur and Sonitpur variet-ies are considered to be superior varieties in the region and the former variety has acquired a GI tag. Even though the NER has congenial agro-climatic conditions for the cultivation of litchi, the production quantity is currently limited. Another important challenge is the inability of the cultivars to express similar superior characteristics when cultivated in other areas of the NER. High perishability of the fruit and lack of proper infrastructure is currently limiting the potential of the product to reach distant markets, domestic as well as international.


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PASSION FRUIT

The NER has a distinct comparative advantage in the production of passionfruit due to its suitable agro-climatic conditions. Manipur, Nagaland, and Mizoram together produce about 95 % of India’s production of the fruit. In 2014-15, with an area under cultivation of 9270 hectares, Manipur has produced approximately 99,000 MT and Nagaland produced about 21250 MT from 8500 hectares. The production and acreage have consistently increased with sustained efforts under area expansion programs under NHM and HMENH programs. However, poor development of supply chain and post-harvest infrastructure and poor connec-tivity to the producing regions have limited the opportunity of processing and exports of the fruit. Passionfruit is perceived as premium fruit in both domestic and international markets, and offers a good opportunity for processing. By establishing processing facilities and strengthening the supply chain, domestic trade and exports of passionfruit can be improved to a great extent.

Constraints and BottlenecksDespite the abundant potential in domestic and export markets explained in the preceding paras, the region’s exports are stagnating at a level much below its potential. This can be attributed largely to a fluidity in the market chain which acts as a major constraint. Unregulated market players, loss in output, and inadequate return on produce and lack of accessibility to proper logistics and transport facilities all spell disaster for the horticulture products and spices due to their perishable nature. There exists an over-reliance on Assam, primarily Guwahati for reaching out to markets. This needs to be addressed and state level hubs for logistics, grading, processing, storage need to be developed to improve the staying power of the primary producer in the region. Streamlining and optimizing the current channel, thereby reducing reliance on middlemen and other supply chain actors who consume a major chunk of the overall yield deserved by the farmer, is essential. The status quo in the horticulture/agri-produce market leads to a number of ill-effects:

y Higher costs incurred in procuring smaller volumes directly from remote villages in the region affects the cost competitiveness of the product in international markets

y Cartel of traders at each level of the chain determine the price inhibiting efficient price discovery

y Higher transportation cost and time result in post harvest losses, further reducing the value

y Lack of efficient storage reduces the time span of the post harvest activities in terms of value addition due to lack of seasonality

y Produce gets mixed at different levels making it difficult to ensure traceability of agri-cultural produce which is essential in global markets

There are some small scale food processing units present in the region. However, they are mainly involved in the preparation of products like pickles, jams, marmalades and squashes. Most of the products thus prepared are relevant only to the local markets, but not to the international markets. They are also inconsistent in quality parameters and low on volumes. Hence they do not meet the demand and standards of international markets. This shows the need for the establishment of such processing units which are export oriented and are focused on the production of market relevant products. The strategy for the establishment of such processing units should rest on identifying the products which, in the given conditions, present in the region, should be easy to produce, possess demand in international markets and offer the best return on investment. Ideal locations to establish the production plants, capacities to be installed, partnerships and models for operationalizing the plant also need to be identified. Identifying such opportunities and helping entrepreneurs venture into them will help in the utilization of surplus and solve the problem of cyclical glut and scarcity in the markets.


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BAMBOO

India, with its vast resources of bamboo, has the potential to become a significant player in international bamboo export. But even though India is the world's second-largest bamboo grower, its bamboo products capture just 4.5 per cent of the global market. This shows that there is a wide gap between demand and supply due to over exploitation, poor regenera-tion, low productivity and lack of market information. In November 2017, the government struck off bamboo from the list of trees and notified it as a grass to remove the restriction on the transportation of bamboo imposed by the Forest Departments in various states, and encourage trade and transportation of bamboo from growers to users. Cane and bamboo have contributed significantly to the livelihood security of millions of indigenous people in the region as is evident from the fact that bamboo and cane craft is the most prevalent craft across the NER. Bamboo has an astonishing 1500 documented uses and the number is growing with new research initiatives being undertaken across the world. In the North East, bamboo is considered the ‘cradle to coffin’ timber due to extensive use in every-day life. Upto 30 days, bamboo shoots are food, between 6–9 months for basketry, between 2–3 years for laminates and boards, and between 3–6 years for construction. Inhabitants of the region have adopted numerous practices to harvest and process the raw materials, employing simple hand tools. These traditional technologies and tools have been passed on from generation to generation, and have undergone some modifications and refinement. Because of the ecofriendly, labor-intensive nature of these processes, their relevance has remained strong to the present day. Information on such local technologies, however, is restricted, localized and largely unpublished, and hence not easily accessible to other interested groups. Further, screening of technologies for commercial applications and their widescale popularization is very crucial to the development of bamboo and cane handicrafts in the region.

India is the second only to China in bamboo production and it is immensely popular in the North Eastern region. Bamboo is one of the most abundant and environmental-friendly and sustainable resources available in the North East region, which is not being tapped to its full potential. The North Eastern Himalayan region of India has great diversity of bamboo resources. Most of the species our country are indigenous. Of them are two primary species, dendrocalamus strictus and the bambusa arundinacea. Dense bamboos are found mostly in Arunachal Pradesh followed by Mizoram and Manipur. Mizoram occupies the largest forest area under different bamboo species, followed by Meghalaya. As this region is the largest reservoir of bamboo resources in India, screening is required to identify the most delicate bamboo species and the development of package of practices for their mass multiplication. Four states of the North East i.e. Tripura, Assam, Mizoram and Nagaland have formulated their own policies for development of bamboo and conservation of bamboo forests.

High diversity of bamboo resource plays a significant role in the food and nutritional security of the tribal population. Tribal communities of the region use this potential resource for food, shelter, furniture, handicrafts, medicines and various ethno-religious purpose. The skill of working with bamboo is extremely widespread with a large percentage of the ethnic population capable of refined craftsmanship in this material. The vigorous bamboo craft tradition of the North East gets the most creative expression through the craftsmanship of the various North Eastern tribes. Intricate structures and myriad types of cuts and profiles made from numerous types of chisels are richly illustrated through the various types of bamboo crafts that these artisans make. The items they make often include things like trays, unique furniture, bamboo and cane mats, decorative lamp shades, stools, hand fans, baskets, hand bags, jewelery etc. This region can add to the global export of steamed and canned bamboo shoot to European countries. All these are labor intensive industries which have an employment potential for the developing states. Thus bamboo industry has the potential to become a major employer in the the North Eastern states.


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There are many popular uses of bamboo that vary from region to region and can be grown without much care, having flexibility of giving varieties of products of different designs. It was traditionally popular as a cheap raw material for building rural dwellings, for manufac-turing utilitarian goods like baskets, various types of beautiful crafts, weaving and spinning equipment in textiles operation and storage bins in agricultural produce, etc. North Eastern India is famous for bamboo wares, notably various decorative items of Tripura, utility items of Nagaland, Manipur, Assam, Sikkim and Arunachal Pradesh like beer mugs, japas, baskets etc. and decorative as well as utility items of Mizoram like the famous Mizo hat.

State-wise Bamboo Density in Recorded Forest Area(Area in Sq k.m.)

State/Year Pure Dense Scattered Hacked Regenarated

Arunachal Pradesh 137 5358 9558 142 824

Assam 41 1543 7244 102 25

Manipur 95 2790 7676 59 67

Meghalaya 47 2035 3816 21 24

Mizoram 35 922 2287 16 7

Nagaland 57 1669 4196 30 73

Sikkim 0 214 339 163 0

Tripura 19 718 3018 4 31

All North East 431 15249 38134 537 1051

NE as % of All India 68% 38% 42% 8% 6%

All India 638 40503 91411 6485 17829

Change from 2011 -602 -11565 30815 -3026 1667

Source: Bamboo resources of the country (India State of the Forest report 2017)

From the table above, it can be concluded that maximum occurrence of pure bamboo is found in Arunachal Pradesh followed by Manipur, Nagaland, Meghalaya and Assam. Together, these 5 states comprise 60% of the forest area under pure bamboo plants. Arunachal Pradesh leads the country in terms of area under dense bamboo, as well with more than land area of 5300 sq. kms. The total bamboo bearing area in the country has increased by 1.8 million hectares, but the density is decreasing.

The consumption of bamboo can be broadly classified as (i) wood substitutes and composites (ii) Industrial use and products (iii) food products (iv) construction and structural applications. The first category includes goods like bamboo based panels, flooring and furniture. There are many advantages of bamboo over wood which have come to light due its rigidity, durability and insulation qualities. In recent years advances in design technology have mitigated problems like low productivity, varying quality and susceptibility to fungi and insects. The most important industrial applications of bamboo in India are in the paper and pulp mills. However, some other lucrative options include using bamboo as fuel, for producing electricity and bamboo based fiber and fabric. Bamboo charcoal has gained popularity in international trade because not only is it high renewable, but also because of its calorific value and absorption properties comparable to wood charcoal. At the same time it is cheaper and easier to produce. The gassification of bamboo which is a clean, cheap and renewable source of energy produces charcoal as a byproduct (approximately 15 per cent of the biomass gassified). Further, this process is independent of the quality, species, and maturity of bamboo. Apart from this,


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bamboo can also be used in pharmaceuticals, creams, beverages and traditional medicines. Bamboo shoots are the main item under food products. India is different from other bamboo producing Asian countries because the bulk of bamboo consumption is not by artisans but by industries which use bamboo for paper and rayon, scaffolding, and bamboo boards.

Description Value (USD’000) Description Value (USD’000)

Raw Materials 29116 Plywood 2185

Pulp 946 Flooring 775

Based on the UN Comtrade database, the world export of bamboo products was estimated at USD 1.7 billion in 2016. This trade largely happens within and between Asia (88%) and the EU (9%). China, the EU, Indonesia, Vietnam and the Philippines are the top 5 exporting countries. India stood fifth in the list of largest importers of bamboo products with USD 36 million worth of imports in 2016 after the EU, the US, Japan and the U.K. 82% of the import was of bamboo raw material follwoed by 6% plywood, 3 % pulp and 2% flooring. Handicraft items using basket work were 1.7% of the total imports of bamboo products in India. China was the main supplier for India at 60%, followed by Vietnam (31%), Indonesia 5% and the EU 2.5%. India did export bamboo flooring of USD 315,000 during 2016, however it was 0.11% of the world market which was dominated by China accounting for 94% of the world export of bamboo flooring.

Bamboo ShootsNearly 66 % of the total bamboo production in the country is from the NER. Tripura, Mizoram, Manipur and Nagaland comprises a high density of bamboo plantations in the region. However, there is no proper data available about the quantum of bamboo shoots production, even though it is consumed as a regular food/vegetable in the local cuisines in fresh, dried, shred-ded and pickled forms. Currently, not much of the cultivation is taken up for the production of bamboo shoots and the package of practices is not clearly defined and is completely from that of culm/timber. Better soil, water and light conditions, and more intensive management are required in the cultivation of bamboo shoots for food purposes. Bamboo shoots are gain-ing prominence in the international market owing to factors like globalization and increased acceptance of various oriental cuisines. China is currently dominating the international market with about 80 % share of exports and offers many learnings about how to take up organized cultivation and processing of bamboo shoots.


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HANDICRAFTS

The development of the rural economy is key to the development of the North Eastern region, as over 80 per cent of the population of the region lives in rural areas and its livelihood depends on spreading economic activities in rural areas. Handloom and handicrafts have been playing an important role in the economies of the North Eastern states. According to a recent study, the region contributes 19.18% of the total number of handicrafts units in India, 21.71% in terms of artisans and 79.58% in terms of value of production. Every 14th person in the NER is dependent on handloom and handicraft products for her livelihood. On an average, 80% of the total income of those engaged in handloom and handicrafts sector comes from this sector. Every state in the region has some unique items of production that have been highly appreciated within the country and also abroad. Handloom and handicrafts products from the North East have excellent brand value. The region has rich craft traditions, which include artistic textile weaving, cane and fiber crafts, wood carvings, jewelry, carpet making, painted wood vessels and handicrafts made of ivory and tusks. The following table provides the resource mapping of handicrafts in the region.

Resource Mapping of Handicrafts in the Region

State District Block Handicraft

Tripura Nalchar Bagabasa Block Cane & bamboo

Bishalghar Sepahijala Cane and Bamboo

Sikkim North Sikkim Lingdong Cane and Bamboo

South Sikkim Namchi Cluster Area Wood Carving

East Sikkim Ranipool, Tadong Carpet

North Sikkim Lachen, Lachung

Assam Dhemaji Sekai, Jonai, Missing Artistic Tribal Textiles

Silchar Narayanpue Cane and Bamboo

Dhubri Asharikandi, Dhuri Debitola Terracotta Crafts

Lakhimpur District Bara Deori gaon Artistic Textiles

Goalpara Dudhnoi Tribal Textiles

Arunachal Pradesh Tawang Kitpi, Thingbu, Mukto, Zemithang,

Lumla

Monpa Textiles

West Kameng Dirang, Bomdila, Rupa, Kalakthang,

Nefra

Artistic Tribal Textiles

West Siang Kaying, Mechuka, Liromoba, Tirbin,

Basar, Likabali

East Siang Panging, Ruksin


96 According to a recent study, the North East Region contributes 19.18% of the total number of handicrafts units in India, 21.71% in terms of artisans and 79.58% in terms of value of production.


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Resource Mapping of Handicrafts in the Region

State District Block Handicraft

Nagaland Kohima Viswema village, Jakhama Block Artistic Tribal Textiles

Phesama

Dimapur Nagarjan Artistic Tribal Textiles, Cane

and Bamboo, Wood

Phek Khezhakeno Artistic Tribal Textiles

Dimapur Chumukedima, Diphupar and Diezephe Bamboo Utility Products

Dimapur Kiyato, Bade & Ura Village,

Dhansiripar Block

District Artistic Textiles, Cane

and Bamboo, Wood

Wokha Wokha Wood Carving, Jewelry & Dry

Flower

Mokokchung Mokokchung Artistic Tribal Textiles & Wood

Carving

Mizoram Aizawl Edenther, Upper Republic Veng,Khatla,

Muallungthu, Tuikual, Kanan

Cane and Bamboo

Mammit Lengpui

Serchhip Serchhip, Thenzawl Tribal Textiles

Lunglei Tuichawng

Kolasib Kawnpui, Kolasib Cane and Bamboo

Manipur Senapati Mao-Maram, Saitu Gamphazol, Purul,

Paomata, Saikul

Tribal Textiles, Cane and

Bamboo

Churachandpur Tipaimuk, Thanlon, Singhat Tribal Textiles

Ukhrul Central Ukhrul , Ukhrul North,

Phungayar, Kasom

West Tamenglong Tamenglong, Nungba, Wangoi,

Haorangsabal

The pivotal role that MSMEs play in the region: A close look

MSMEs IN NORTH-EAST INDIA


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MSME IN THE NORTH EAST

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Recent initiatives for development of industries in the North Eastern Region include improved policies and programmes towards development of infrastructure, entrepreneurship skills, markets and providing flow of credits to the entrepreneurs. The orientations of the programmes are focused to a large extent on

i. Cluster-based approach to industry

ii. Industries based on local resources within the region, and

iii. Encouraging the industries in the medium and small-scale sectors.

North Eastern Development Finance Corporation Ltd. (NEDFi), has undertaken techno-eco-nomic studies and resources mapping for the development of industries in the North Eastern Region. The areas so far covered in the study include inter-alia, medicinal and aromatic plants, agriculture, livestock and poultry development, tourism, software development, handloom and handicrafts and food processing.

With government focus on upgrading the infrastructure in the region, several projects for improvement in road, rail, air, communication, waterways and telecom network in the region are either completed or underway. Addressing connectivity issues assumed a new seri-ousness. The government has set up National Highways and Infrastructure Development Corporation Limited (NHIDCL) in 2014, which is now fast tracking road building activity. Thrust has been given to the promotion of handlooms and handicrafts in the North Eastern region. Under the North Eastern Region Textile Promotion Scheme, an amount of INR 286 crore has been spent during the last two years.

The government is implementing various schemes/programs for promotion, upgradation and development of Micro, Small and Medium Enterprises throughout the country including the NER region. The major schemes/programs include Prime Minister’s Employment Generation Programme (PMEGP), Credit Guarantee scheme, Credit Linked Capital Subsidy Scheme (CLCSS), National Manufacturing Competitiveness Program, Cluster Development Program, International Cooperation Scheme etc. Efforts have been undertaken to motivate entrepre-neurs to invest in sectors like plastics and polymers, tourism and hospitality, information technology, food processing, aromatic and medicinal plants, sericulture, horticulture and floriculture, handlooms and handicrafts, and bamboo processing etc. Some entrepreneurs have set up ventures and taken assistance from NEDFi. In addition, North Eastern Council has supported a number of projects proposed by State Governments relating to development of work-sheds and marketing of produce.

The Micro, Small and Medium Enterprises (MSMEs) play a pivotal role in the economic and social development of the country, often acting as a nursery of entrepreneurship. They also play a pivotal role in the development of the economy with their effective, efficient, flexible and innovative entrepreneurial spirit. The MSME sector has been a significant contributor to the country’s economy along with generating the highest employment growth, as well as accounting for a major share of industrial production and exports. MSMEs across the globe are fueling economic growth and are the key instruments for promoting equitable develop-ment. The primary attribute of the sector is its employment potential at low capital cost. The labor intensity of space is much higher than that of large enterprises. MSMEs account for about 90 per cent of total enterprises in most of the economies, and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. On the domestic front, MSMEs play an essential role in the overall industrial economy of the country. In recent years, the MSME sector has been consistent

MSMEs IN NORTH-EAST INDIA


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in registering a higher growth rate compared with the overall industrial sector. Further, with qualities such as agility and dynamism, the sector has shown admirable innovation and adaptability to survive the recent economic downturn and recession. The Indian MSME sector space is immensely heterogeneous with regard to the size of the enterprises, variety of products and services, and levels of technology. The sector not only plays a crucial role in providing employment opportunities at comparatively lower capital cost than large industries, but also helps in industrialization of rural and backward areas, reducing regional imbalances and assuring more equitable distribution of national income and wealth. MSMEs comple-ment large industries as ancillary units and contribute enormously to the socio-economic development of the country. Apart from providing support to large industries, MSMEs have played an important role in the development of states in terms of employment generation.

What are Micro, Small & Medium Enterprises?

Definitions of Micro, Small & Medium Enterprises in accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, Micro, Small and Medium Enterprises (MSME) are classified into two classes:

y Manufacturing Enterprises: Enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the Industries (Devel-opment and Regulation) Act, 1951, or employing plant and machinery in the process of value addition to the final product, having a distinct name or character or use. Manufac-turing enterprises are defined in terms of investment in plant and machinery.

y Service Enterprises:-Enterprises engaged in providing or rendering of services. These are defined in terms of investment in equipment.

The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under:

Manufacturing Sector

Enterprises Investment in Plant and Machinery

Micro Enterprises Does not exceed INR 25 lakhs

Small Enterprises More than INR 25 lakhs but do not exceed INR 5 crores

Medium Enterprises More than INR 5 crores but do not exceed INR 10 crores

Service Sector

Enterprises Investment in Equipment

Micro Enterprises Do not exceed INR 10 lakhs

Small Enterprises More than INR 10 lakhs but do not exceed INR 2 crores

Medium Enterprises More than INR 2 crores but do not exceed INR 5 crores


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3.1 State-wise MSME Scenario

Based on the 73rd round of the National Sample Survey (NSS), 18.92 million MSME units were estimated in the region. Assam, Tripura and Manipur accounted for 85% of the registered units in the region. The remaining 5 states had 15% of MSME units registered with them.

State-wise Distribution Estimated Number of MSME (NSS 73rd Round)

State/UTEstimated number of enterprises (Number in lakh)

Micro Small Medium MSME

Arunachal Pradesh 0.22 0.01 0.00 0.23

Assam 12.10 0.04 0.00 12.14

Manipur 1.80 0.00 0.00 1.80

Megahlaya 1.12 0.00 0.00 1.12

Mizoram 0.35 0.00 0.00 0.35

Nagaland 0.91 0.00 0.00 0.91

Sikkim 0.26 0.00 0.00 0.26

Tripura 2.10 0.01 0.00 2.11

Source MSME Annual Report 2017-18

State-wise Distribution Estimated Number of Employees (NSS 73rd Round)

State/UTEstimated number of employees (Number in lakh)

Women Men Total

Arunachal Pradesh 0.11 0.29 0.41

Assam 1.78 16.37 18.15

Manipur 1.40 1.52 2.92

Megahlaya 0.72 1.19 1.91

Mizoram 0.28 0.34 0.62

Nagaland 0.59 1.18 1.77

Sikkim 0.14 0.31 0.45

Tripura 0.44 2.51 2.95

Source MSME Annual Report 2017-18

Manipur, Mizoram, Meghalaya, Nagaland and Sikkim had good participation by women workers in the MSMEs of the state. The employment generation potential was not very high as the average employment per unit did not exceed 2 persons in any of the states.

The pattern of industrial development of the NER has not been in conformity with the stan-dard historical trend even with respect to India. That is, industrialization has failed to take off in the region. This failure to achieve a significant increase in the share of manufacturing in GDP has reflected in the poor growth rates both in GDP and per capita GDP in the NER.


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The manufacturing sector of the states of Manipur, Tripura and Meghalaya has fared better than the national average. However, the growth performance of the manufacturing sector in the remaining states of the region has been poor. In Arunachal Pradesh, the manufacturing sector has been virtually stag-nant. The poor performance of the manufacturing sector seems to be one of the prime causes of the relatively poor performance of GDP growth of the region.

The manufacturing sector can be divided into regis-tered and unregistered sectors. The unregistered sector generally comprises small-scale industries including handicrafts. Assam is by far the largest industrialized state in the region comprising nearly 88 per cent of the total industrial units in the region. Nearly 90 per cent of the industrial output of the registered manufacturing sector originates in Assam, while Arunachal Pradesh has no registered manufac-turing industry.

The industries are mainly mining and quarrying, food processing, spinning and weaving, pulp and paper, wine and malt, bidi, cigars and cigarettes, printing, bleaching and dyeing, wool spinning, wooden prod-ucts, footwear, fertilizers and chemicals, insulated wires and cables, and drugs and medicines. Manu-facturing activities are based on locally available resources for which the optimal plant sizes are not very large. Industries requiring large scale production such as petrochemicals, cement, steel and sugar are completely absent despite the fact that the region has the sources of basic raw materials required for the production of such goods. For example, there is abundance of limestone (in Meghalaya and Assam) but there is not a single cement factory in the region. Assam has the largest oil reserves (non-offshore) but the state has no large manufacturing unit of petrochemical products. On the other hand, we also observe some industries like insulated wires and cables coming up in the region, although the region has no known reserves of copper.

Another important observation that could be made is that the unregistered sector is relatively evenly distributed across all the states in the NER. This means that the states of the NER have certain distinctive strengths and advantages in handicrafts and other small scale industries.

Assam has the largest share in the unorganized sector followed by Manipur. It is evident, therefore, that small-scale industries could not play any signif-icant role in the development of the NER. The NER is a market of about 400 million people having inter-

national borders with Bangladesh, Bhutan, China, Myanmar, and Nepal. The region has the potential to develop into India’s powerhouse, being a vibrant source of energy, oil, natural gas, coal, and lime-stone; and it is endowed with India’s largest perennial water system in the river Brahmaputra and its tribu-taries. The NER is also rich in horticultural products, plantation crops, vegetables, spices, rare herbs, and medicinal plants. The region offers unlimited tourism opportunities, rare flora and fauna, natural scenic beauty, unique performing arts, and varied cuisines and handicrafts. The region being a great source of bamboo and a number of agro resources, capacity building in the bamboo sector as well as in other agro-processing areas should be taken up.

The NER is unique in terms of opportunities. While it is an industrial desert where almost all immedi-ate consumables are imported from outside the region, it is the focal point of trade within a vast area. The NER’s locational advantage and rich natural resources provide a backdrop to its development as a base for cooperation not only with ASEAN but also with neighbouring countries such as Bangladesh, Bhutan, and Nepal. And through Myanmar, Regional Cooperation Center, the NER can be extended to Mekong region, comprising Cambodia, Lao PDR, Thailand, and Vietnam. The NER can emerge as a strategic base for foreign/domestic investors to tap the world’s largest market in SAARC, BIMSTEC, and ASEAN. At the same time, it has certain peculiari-ties and problems, which, if tackled and leveraged in the right perspective, could yield rich dividends. It is therefore essential to evolve a regional approach as opposed to an individual state approach while drawing up a trade policy for the NER.

3.2 MSME Export Promotion Schemes

Export Promotion Schemes by Office of the DC MSME

Rationale behind Export PromotionThe capability of Indian MSME products to compete in international markets is reflected in its share of about 34% in national exports. In case of items like readymade garments, leather goods, processed foods, engineering items, the performance has been commendable both in terms of value and their share within the MSME sector while in some cases like sports goods they account for 100% share to the total exports of the sector. In view of this, export promotion from the small scale sector has been accorded high priority in India’s export promotion strategy which includes simplification of procedures, incentives for higher production of exports, prefer-


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ential treatment to MSMEs in the market develop-ment fund, simplification of duty drawback rules, etc. Products of MSME exporters are displayed at international exhibitions free of cost under MSME-DO Umbrella abroad.

International Exposure to MSME ProductsWith a view to rendering assistance to Micro & Small Manufacturing Enterprises in the field of exploring market potential, export promotion, participation in international trade fair exhibition, the following schemes are being implemented:

Marketing Assistance and Export Promotion SchemeA. Plan Scheme ‘Training and Manpower Develop-

ment' consists of the following Components:- y Participation in International Exhibitions/

Fairs y Training Program on Packaging for Exports y Marketing Development Assistance

Scheme for MSME Exporters (MSME-MDA) y National Award for Quality Products

B. Export Promotion from the small-scale sector has been accorded a high priority in India's export promotion strategy. Apart from the number of incentives and facilities to small-scale exporters, the following plan schemes are in operation for achieving growth in exports.

Participation in International Exhibitions/FairsOffice of the Development Commissioner (MSME) has been participating in some of the selected Inter-national Exhibitions/ Fairs since 1985. It is purely a promotional scheme to give exposure to the products of micro, and small enterprises who are otherwise not in a position to participate in the exhibitions/ fairs at their own cost. Under the scheme, exhibits of the selected export-worthy units are displayed in the exhibition that provides an opportunity to MSEs in demonstrating their capabilities before the inter-national community. On an average, this office has been participating in 8-10 International Exhibitions/ Fairs abroad every year and 200 MSEs have been benefited. For confirmed participation, the unit has to send 50% of space hiring charges of their booked space (min. 6 sq. mtr.) through MSME-Development Institutions (Formerly SISIs) by a Demand Draft favoring PAO (MSME), New Delhi at least 45 days in advance of the commencement of the event or till space is available.100% subsidy on space rent is available to SC/ST women entrepreneurs and entre-preneurs of the North East region. The participating units will also carry/ manage their exhibits (to and fro) including custom clearance etc. If anybody wants more space, they can book in multiple of 1x3 sq.mtr.

on pro-rata base and would be required to pay on pro-rata basis. 75% subsidy on air fare of economy class to general category of entrepreneurs (100% to SC/ST women entrepreneurs and entrepreneurs of the North East region)

Training Programmes on Packaging for Exports India faces formidable hurdles in meeting and match-ing the packaging requirements of her exportable products in the markets abroad. The main objec-tive of the scheme is to generate the much needed consciousness in the industry about the packaging problems of MSME exporters and to educate the entrepreneurs about the latest packaging techniques and designs of the packaging. These programs on Packaging for Exports are being conducted since 1979 by all the field institutes in collaboration with Indian Institute of Packaging and GS1 India (formerly EAN India) (A Bar Code solution provider ). The program is of one, two and three days duration and 20 to 35 existing and potential entrepreneurs have been participating in each of these programs. As per instruction of IF Wing, only 50-60 percent (20 percent in North East region and J&K) of the total cost of the program is recovered from the participants as partic-ipation fee. 20-25 programs are being conducted every year throughout the country.

Market Development Assistance Scheme for MSME Exporters (MSME-MDA)As part of the comprehensive policy package for MSMEs, the MSME-MDA scheme has been announced in August 2000 and came into operation w.e.f. 30th August, 2001. With a view to increase participation of representatives of participating units, the provision of MSME-MDA scheme has been modified recently. The major changes in the earlier scheme are as under:

i. The Government of India will reimburse 75% of the air fare by economy class and give 50% subsidy on space rent for general category of Micro manufacturing enterprises. This rises to 100% for SC/ST, women entrepreneurs and entrepreneurs of the North East region

ii. The total subsidy on air fare, space rent and shipping cost of exhibits will be restricted to INR 1.25 lakhs per unit for manufacturing enter-prises or actual, whichever is less

iii. Any unit can avail of this facility only once a year

iv. Only one person of the participating unit would be eligible for subsidy on air fare


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v. The booking of minimum 6 Sq. mtrs. is allowed. The amount of 50% of space hiring charges shall be sent by a Demand Draft favoring PAO (MSME), New Delhi through MSME-Dis (Formerly SISIs) along with passport particulars and the first and last two pages of a valid passport of their visiting representatives

vi. The circulars are issued to Director, all MSME-DIs (formerly SISIs) for selection of Small/ Micro manufacturing enterprises whose prod-ucts conform to the International Standards & Quality

vii. One MSME-DO officer will be deputed to each fair for coordination of MSME India stall

In addition, the scheme also provides for financial assistance upto INR 2.00 lakhs for commissioning specific market studies. Assistance for initiating/ contesting anti-dumping cases is available to the MSME Association limited to 50% of the total cost of INR 1.00 lakh, whichever is less

National Award for Quality ProductsThe objectives of the scheme are as follows

a. To encourage small scale industries to produce quality products conforming to national and international standards

b. To propagate a culture of quality consciousness amongst a vast section of small-scale manu-facturing units

c. To instil a sense of confidence about small industry products in the minds of domestic consumers and to enhance the image of Indian products in export market

These awards are given on the basis of recommen-dations by the State/ UT Level Selection Committee and the final selection is done by the National Level Selection Committee every calendar year.

Packaging for Exports

The role of packaging for exports has gained much significance in view of trends in the world markets. The need for better and scientific packaging for exports from small sector was recognized long back.

With a view to acquaint MSME exporters of the latest packaging standards, techniques etc., train-ing programs on packaging for exports are organized in various parts of the country. These programs are organized in association with Indian Institute of Packaging which has the requisite expertise on the

subject. The basic objective of these programs is to generate the much needed consciousness in the industry and to educate the entrepreneurs about the scientific techniques of packaging. With the assis-tance of EAN India to sensitize Indian exporters about barcoding, 7 training sessions were conducted in 2000-01 at different locations across the country. However, bar code topic is added in the said program.

Technical & Managerial Consultancy ServicesTechnical and Managerial Consultancy Services to the MSME manufacturers/exporters is provided through a network of field offices so as to ensure higher level of production and generation of higher exports.

National Awards for Quality ProductsWith a view to encourage the small scale units for producing Quality goods, National Awards for Quality Products are given to the outstanding small scale units who have made a significant contribution to improving the quality of their products. The scheme is being operated since 1986. Winners of National Awards get a Trophy, a Certificate and a Cash Prize of INR 25,000. National Awards encourage Small Scale Industries units to produce quality goods which further enables them to enter into the export market.

3.3 North East Industrial Development Scheme (Neids), 2017

On 21st March, 2018, the Government of India has approved the North East Industrial Development Scheme (NEIDS), 2017, with a financial outlay of INR 3000 crores upto March, 2020. The government will provide the necessary allocations for the remain-ing period of the scheme after assessment, before March 2020. NEIDS is a combination of the incen-tives covered under the earlier two schemes with a much larger outlay. To promote employment in the North East States, the government is incentivizing primarily the MSME sector through this scheme. The government is also providing specific incentives through the scheme to generate employment. All eligible industrial units, which get benefits of one or more components of other schemes of the Govern-ment of India, will also be considered for benefits of other components of this scheme.

Under the scheme, the following incentives shall be provided to new industrial units set up in the North Eastern States including Sikkim

y Central Capital Investment Incentive for Access to Credit (CCIIAC): 30% of the invest-ment in plant and machinery with an upper limit


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of INR 5 crore on the incentive amount per unit.

y Central Interest Incentive (CII): 3% on work-ing capital credit advanced by eligible Banks/ Financial institutions for the first 5 years from the date of commencement of commercial production by the unit.

y Central Comprehensive Insurance Incentive (CCII): Reimbursement of 100% insurance premium on insurance of building and plant and machinery for 5 years from the date of commencement of commercial production by the unit.

y Goods and Service Tax (GST) Reimbursement: Reimbursement up to the extent of Central Government share of CGST and IGST for 5 years from the date of commencement of commercial production by the unit.

y Income Tax (IT) Reimbursement: Reimburse-ment of the center’s share of income tax for the first 5 years including the year of commence-ment of commercial production by the unit.

y Transport Incentive (TI) y 20% of the cost of transportation includ-

ing the subsidy currently provided by Railways/ Railway PSU for movement of finished goods by rail.

y 20% of cost of transportation for finished goods for movement through Inland Water-ways Authority of India.

y 33% of cost of transportation of air freight on perishable goods (as defined by IATA) from the airport nearest to the place of production to any airport within the coun-try.

y Employment Incentive (EI): The Government shall pay 3.67% of the employer’s contribution to Employees’ Provident Fund (EPF) in addi-tion to the government bearing 8.33% of the Employee Pension Scheme (EPS) contribution of the employer to the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY).

y The overall cap for benefits under all compo-nents of incentives will be INR 200 crores per unit.

y The newly introduced scheme shall promote industrialization in the states of the North Eastern Region and will boost employment and income generation.

3.4 Export Promotion Measures In India

A number of institutions have been set up by the Government of India to promote exports. The export and import functions are looked after by the Ministry of Commerce and Industry. The Government formu-lates export-import policies and programs that give direction to exports. Exim policies aim at export assistance such as export credit, cash assistance, import replenishment, licensing, free trade zones, development of ports, quality control and pre-ship-ment inspection, and guidance to Indian entrepre-neurs to set up ventures abroad.

International PresenceThe Director of Exhibitions makes arrangements for participation in international exhibitions, holds Indian exhibitions abroad, operates showrooms in foreign countries and sets up trade centers outside India.

Export Promotion CouncilThe Director of Commercial Intelligence is concerned with commercial publicity through various media, monthly publications, directories of foreign importers of Indian products, country-wise.

There are 22 export promotion councils for differ-ent products, offering services of export promotion such as price, quality, packing, marketing, transport etc. They conduct market surveys, publish reports on foreign trade, administer various export promo-tion schemes, and develop trade contacts, quality control, joint participation in trade fairs and exhibi-tions.

Setting up of Commodity Boards to Promote ExportsCommodity Boards are set up to help export of tradi-tional items. There are seven Commodity Boards apart from the All India Handloom and Handicraft Board under the Ministry of Commerce. They advise the government on its policies, signing trade agree-ments, fixing quota, etc.

Trade RepresentativesThere are Trade Representatives abroad who conduct market surveys, furnish information on exports-im-ports, settle trade disputes and share information about rules and regulations for imports.

Indian Institute of Foreign TradeThe Indian Institute of Foreign Trade (IIFT) was set up by the Government of India in co-operation with trade, industry, universities, educational and research insti-tutions. It is an autonomous body, set up to train people in international trade, conduct research,


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survey and organize training programmes.

Participation in Trade FairsTo promote, organize and participate in international trade fairs, the Government of India set up the Trade Fair Authority of India in 1977. It sets up showrooms and shops in India and abroad. It assists in the devel-opment of new items for diversification and expan-sion of India’s exports. It publishes journals namely, Journal of Industry & Trade, Udyog Vyapar Patrika, Indian Export Service Bulletin and Economic and Commercial News.

Trade Development AuthorityIn addition to the above, the Trade Development Authority collects information, conducts research and renders export finance and help in securing and implementing export orders.

Financing for ExportThe Export Credit Guarantee Corporation (ECGC) covers both commercial and political risks on export credit transactions. Its head office is in Mumbai and branches are in Delhi, Kolkata and Chennai. In 1982, the Government of India set up EXIM Bank with its head office in Mumbai, and branch offices in other major cities in India and abroad.

EXIM Bank finances export and import of machinery, it finances joint ventures, provides loans, undertakes merchant banking functions such as underwriting stocks, shares and bonds or debentures, develops and finances export oriented industries, undertakes techno-marketing studies and, promotes interna-tional trade.

Advisory CouncilsSome of the State Governments have set up special-ized Export Trade Corporations which undertake export promotion. They are established in Andhra Pradesh, Bihar, Karnataka, Uttar Pradesh, Madhya Pradesh, and Himachal Pradesh. There are also Advisory Councils like Board of Trade, Export-Import Advisory Council, etc.

Technical Assistance And TrainingThe Small Industries Development Organization (SIDO) with 26 small industries service institutions, provides techno-managerial assistance like motivat-ing entrepreneurs to export, provides information on export-import and offers consultancy services with respect to export procedures, documentation and export incentives.

It also provides training programs to educate entre-preneurs on exports, conducts seminars, meetings,

holds discussions with export promotion agencies and publishes small industry export bulletin, besides liaising with export promotion organizations for solv-ing the problem of small scale exporters.

3.5 Export Promotion Schemes, Ministry of Commerce & Industry, Government of India

Foreign Trade Policy 2015-20 and other schemes provide promotional measures to boost India’s exports with the objective to offset infrastructural inefficiencies and associated costs involved to provide exporters a level playing field. A brief of these measures is as under:

Exports from India SchemeMerchandise Exports from India Scheme (MEIS)

Under this scheme, exports of notified goods/ prod-ucts to notified markets as listed in Appendix 3B of the Handbook of Procedures, are granted freely transferable duty credit scrips on realized FOB value of exports in free foreign exchange at spec-ified rate (2-5%). Such duty credit scrips can be used for payment of customs duties for import of inputs or goods, payment of excise duty on domestic procurement, payment of service tax and payment of customs duties in case of Export Obligation (EO) default.

Exports of notified goods of FOB value upto INR 25, 000 per consignment, through courier or foreign post office using e-commerce shall be entitled for MEIS benefit.

Service Exports from India Scheme (SEIS)Service providers of notified services are eligible for freely transferable duty credit scrip @ 5% of net foreign exchange earned.

Duty Exemption and Remission SchemesThese schemes enable duty free import of inputs for export production with export obligation. These scheme consists of:-

Advance Authorization SchemeUnder this scheme, duty free import of inputs are allowed, that are physically incorporated in the export product (after making normal allowance for wastage) with minimum 15% value addition. Advance Authori-zation (AA) is issued for inputs in relation to resultant products as per Standard Input Output Norms-Export Product (SION) or on the basis of self-declaration, as per procedures of FTP. AA normally has a valid-ity period of 12 months for the purpose of making imports and a period of 18 months for fulfilment of


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Export Obligation (EO) from the date of issue. AA is issued either to a manufacturer exporter or merchant exporter tied to a supporting manufacturer(s).

Advance Authorization for Annual RequirementExporters having past export performance (in at least the preceding two financial years) shall be entitled for Advance Authorization for annual requirement. This shall only be issued for items having SION.

Duty Free Import Authorization (DFIA) SchemeDFIA is issued to allow duty free import of inputs, with a minimum value addition requirement of 20%. DFIA shall be exempted only from the payment of basic customs duty. DFIA shall be issued on post export basis for products for which SION has been notified. Separate schemes exist for the gems and jewelry sector for which FTP may be referred.

Duty Drawback of Customs/Central Excise Duties/Service TaxThe scheme is administered by Department of Reve-nue. Under this scheme, products made out of duty paid inputs are first exported and thereafter refund of duty is claimed in two ways:

i. All Industry Rates: As per Schedule

ii. Brand Rate: As per application on the basis of data/documents

Rebate of Service Tax through all Industry RatesRefund of service tax paid on specified output services used for export of goods is available at specified all industry rates..

EPCG SchemeZero duty EPCG SchemeUnder this scheme, import of capital goods at zero customs duty is allowed for producing quality goods and services to enhance India’s export competitive-ness. Import under EPCG shall be subject to export obligation equivalent to six times of duty saved in six years. Scheme also allows indigenous sourcing of capital goods with 25% less export obligation.

Post Export EPCG Duty Credit Scrip SchemeA Post Export EPCG Duty Credit Scrip Scheme shall be available for exporters who intend to import capi-tal goods on full payment of applicable duty in cash.

EOU (Export Oriented Units)/EHTP (Electronic Hard-ware Technology Park) / STP (Software Technology Parks) and BTP (Bio Technology Park) SchemesUnits undertaking to export their entire production of goods and services may be set up under this

scheme for import/ procurement domestically with-out payment of duties. For details of the scheme and benefits available therein FTP may be required.

Other SchemesTowns of Export Excellence (TEE)Selected towns producing goods of INR 750 crores or more are notified as TEE on potential for growth in exports and provided financial assistance under Market Access Initiative (MAI) Scheme to recognized Associations.

Rebate of Duty on “Export Goods” and “Material” used in Manufacture of Such GoodsRebate of duty paid on excisable goods exported or duty paid on the material used in manufacture of such export goods may be claimed under Rule of 18 of Central Excise Rules, 2002.

Export of Goods under Bond i.e. without Payment of Excise DutyRule 19 of Central Excise Rules 2002 provides clear-ance of excisable goods for exports without payment of central excise duty from the approved factory, warehouse and other premises.

Market Access Initiative (MAI) SchemeUnder this scheme, financial assistance is provided for export promotion activities based on focus coun-try, focus product basis to EPCs, Industry & Trade Associations, etc. The activities include market studies/surveys, setting up showroom/warehouse, participation in international trade fairs, publicity campaigns, brand promotion, reimbursement of registration charges for pharmaceuticals, testing charges for engineering products abroad, etc. Details of the scheme are available at www.commerce.nic.in

Marketing Development Assistance (MDA) SchemeFinancial assistance is available for exporters having an annual export turnover upto INR 30 crores for trade fairs, buyer seller meets organized by EPCs/Trade Promotion Organizations. MDA guidelines are available at www.commerce.nic.in

Status Holder SchemeUpon achieving the prescribed export performance, status recognition as one star Export House, two star Export House, three star Export House, four star Export House and five star Export House is accorded to the eligible applicants as per their export perfor-mance. Such status holders are eligible for various non-fiscal privileges as prescribed in the Foreign Trade Policy.

In addition to the above schemes, facilities like


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24X7 customs clearance, single window in customs, self-assessment of customs duty, prior filing facil-ity of shipping bills etc. are available to facilitate exports.

3.6 National Manufacturing Competitiveness Programme (NMCP)

The Government of India has launched a National Manufacturing Competitiveness Program (NMCP) with an aim to support the Micro, Small and Medium Enterprises (MSMEs) in their endeavor to become competitive. Launched in December 2018, the objec-tive of NMCP is to develop global competitiveness among Indian MSMEs. The Program aims to develop global competitiveness among Indian MSMEs by improving their processes, designs, and technology and market access. The Program envisages substan-tial investments towards enhancing the entire value chain of the MSME sector. All the components of NMCP have already been operationalized and are likely to spur innovation and growth in the MSME sector. These include Quality Management Systems and Quality Technology Tools, Design Clinic Scheme, Building Awareness on IPRs, Support for Entrepre-neurial and Managerial Development, Marketing Support/Assistance to MSMEs, Setting up of New Mini Tool Room and Lean Manufacturing Competitive-ness Scheme. These components seek to introduce the best elements of industrial competitiveness in the MSME sector, which has often been unable to afford such practices and techniques. This Program targets at enhancing the entire value chain of the MSME sector through the following components:

y Lean Manufacturing Competitiveness Scheme for MSMEs

y Promotion of Information & Communication Tools (ICT) in the MSME sector

y Technology and Quality Upgradation Support to MSMEs

y Design Clinics Scheme for MSMEs y Enabling Manufacturing Sector to be Compet-

itive through Quality Management Standards (QMS) and Quality Technology Tools (QTT)

y Marketing Assistance and Technology Upgrada-tion Scheme for MSMEs

y National Campaign for Building Awareness on Intellectual Property Rights (IPR)

y Support for Entrepreneurial and Managerial Development of SMEs through Incubators

y Bar Code under Market Development Assis-tance (MDA) Scheme

Lean Manufacturing Competitiveness Scheme for MSMEsUnder the Lean Manufacturing Program (LMP), MSMEs are being assisted in reducing their manu-facturing costs, through proper personnel manage-ment, better space utilization, scientific inventory management, improved process flows, and reduced engineering time. LMP also brings improvement in the quality of products and lowers costs, which are all essential for competing in national and interna-tional markets. The broad activities planned under LMP include, Total Productive Maintenance (TPM), 5S, Visual Control, Standard Operation Procedures, Just in Time, Kanban System, Cellular Layout, Poka Yoke, TPM, etc. The scheme is initially approved for 100 mini clusters on a pilot basis.

Promotion of Information & Communication Tools (ICT) in MSMEThe main objective of the scheme is to encourage and assist the potential MSME clusters to adopt ICT tools and applications in their production and business processes, with a view to improve their productivity and competitiveness in national and international markets. The broad activities planned under this component include identifying the potential MSME manufacturing clusters for ICT intervention, setting up of e-readiness center, developing web portals for clusters, skill development of MSMEs’ employees/staff, preparation of local software solutions for MSMEs to enhance their competitiveness, etc. and enabling networking of MSME cluster portals on the National Level Portals so that to MSMEs can access global markets. The scheme is being implemented in 100 clusters.

Technology Upgradation and Quality Certification Support to MSMEs The objective of this component of NMCP is to sensi-tize MSMEs about the benefits that could accrue from usage of energy efficient technologies, reduc-tion in emissions of Green House Gases, improve the acceptance of their products by product quality certification, thereby making them globally competi-tive. The major activities planned under this compo-nent include Capacity Building of MSME Clusters for Energy Efficiency/Clean Development Interventions, Implementation of Energy Efficient Technologies in the MSME sector, setting up of Carbon Credit Aggre-gation centers and encouraging MSMEs to acquire product certification licenses from National / Inter-national bodies.

Support for Entrepreneurial and Managerial Devel-opment of SMEs through IncubatorsThis component aims at nurturing innovative busi-


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ness ideas (new/indigenous technology, process, products, procedures, etc.) which could be commer-cialized in a year. Under this component, various institutions like Engineering Colleges, Management Institutions, Research Laboratories, etc. are provided funds up to INR 6.25 lakhs for hand-holding each new idea/entrepreneurs. The incubators provide technol-ogy/guidance, workshop and laboratory support and linkages to other agencies for successful launching of the business and guide the entrepreneur in estab-lishing the enterprise.

Design Clinic Scheme for MSMEsThe main objective of this component is to bring the MSME sector and design expertise on a common platform and to provide expert advice and solutions on real time design problems, resulting in contin-uous improvement and value addition for existing products. It also aims at value-added cost effective solutions. The activities under the scheme include organizing seminars, workshops in the MSME clus-ters and designing projects of MSME units.

Enabling Manufacturing Sector to be Competitive through Quality Management Standards (QMS) and Quality Technology Tools (QTT)The objective of the scheme is to improve the quality of the products in the MSME sector and inculcate quality consciousness in enterprises in this sector. Major activities are (i) Introduction of Appropriate Modules for Technical Institutions; (ii) Organizing Awareness Campaigns for MSEs; (iii) Organizing Competition-Watch (C-Watch); (iv) Implementation of Quality Management Standards and Quality Tech-nology Tools in selected MSMEs; (v) Monitoring Inter-national Study Missions; and (vi) Impact Studies of Application of QMS/ QTT.

ISO 9000/14001/HACCP Reimbursement SchemeTo enhance the competitive strength of the MSEs, the Government of India has introduced a scheme to provide technological upgradation, quality improve-ment and better environment management by the MSEs. The scheme reimburses 75% of the fees, subject to a maximum of INR 75,000 for acquiring Quality Management System (QMS) ISO 9000/HACCP certification and/or Environment Manage-ment System (EMS) ISO 14001 certification by the MSEs. All Micro and Small Enterprises having Entre-preneurial Memorandum (EM) Number are eligible to avail the reimbursement and units can apply for reim-bursement under the scheme only after obtaining ISO-9000/14001/HACCP Certification. The scheme provides a one-time reimbursement.

Building Awareness on Intellectual Property Rights for MSMEsUnder the NMCP, the component for “Building Awareness on Intellectual Property Rights (IPR) for the Micro, Small & Medium Enterprises (MSME) has been launched to enable Indian MSMEs to attain a global leadership position and to empower them in effectively using the tools of Intellectual Property Rights (IPR) of innovative projects. The main features of the scheme are: (i) Awareness/Sensitization Programmes on IPR; (ii) Pilot Studies for Selected Clusters/Groups of Industries; (iii) Interactive Semi-nars/Workshops; (iv) Specialised Training; (v) Assis-tance for Grant on Patent/GI Registration; (vi) Setting up of IP Facilitation Center (IPFC); and (vii) Interac-tion with International Agencies. These initiatives are being taken on in Public-Private Partnership (PPP) mode.

Marketing Assistance and Technology Upgradation Scheme for MSMEsThe objective of this component is to identify and encourage such clusters of MSMEs, which have quality production and export potential, and assist them to achieve competitiveness in the national and international markets through technological upgrada-tion in packaging, skill upgradation/development of modern marketing techniques, competition studies, participation in local exhibition/fairs, setting up of marketing hubs etc.

3.7 Other Central Government Schemes for the MSME

Credit Guarantee Scheme for Micro and Small Enter-prisesThe objective of the scheme is to make available credit to SSI units, particularly tiny units, for loans up to INR 100 lakhs without collateral/third party guarantees. The scheme covers collateral-free credit facility (term loan and/or working capital) extended by eligible lending institutions to new and existing micro and small enterprises up to INR 100 lakhs per borrowing unit. The guarantee cover provided is up to 75% of the credit facility up to INR 50 lakhs with an incremental guarantee of 50% of the credit facility above INR 50 lakhs and up to INR 100 lakhs. The scheme is being operated by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) set up jointly by the Government of India and SIDBI. The corpus of CGTMSE is contributed by the Govern-ment of India and SIDBI in the ratio of 4:1.


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Credit Linked Capital Subsidy Scheme (CLCSS)CLCSS scheme aims at facilitating technology upgra-dation of small scale industries, including tiny, agro and rural industrial units, by providing 15 per cent upfront capital subsidy of the institutional finance availed of by them for induction of well-established and improved technology in specified sub-sectors/products approved under the scheme. The admis-sible capital subsidy under the modified scheme is calculated with reference to the purchase price of plant and machinery. The maximum limit of eligible loan for calculation of capital subsidy under this scheme has also been raised from INR 40 lakhs to INR 100 lakhs. The modification in the CLCSS guide-lines will further facilitate modernization of small scale industries.

The Micro and Small Enterprises – Cluster Devel-opment ProgramMSE - CDP is being implemented for holistic and inte-grated development of micro and small enterprises in clusters. The scheme envisages soft interventions i.e. diagnostic studies, hard interventions i.e. setting up of CFCs and Infrastructure Development in the new/existing industrial estates.

Credit Rating SchemeThe scheme is being implemented through National Small Industries Corporation (NSIC) Limited. The main objective of the scheme is to provide a trusted third party opinion on the capabilities and credit-wor-thiness of the MSEs so as to create awareness among them about the strengths and weaknesses of their existing operations. Rating under the scheme is being carried out through empaneled rating agen-cies i.e. CRISIL, CARE, ONICRA, SMERA, ICRA and Brickwork India Ratings. Under this scheme, rating fee payable by the micro & small enterprises is subsi-dized for the first year only and that is subject to a maximum of 75% of the fee or INR 40000/-, which-ever is less.

Marketing Assistance SchemeThe scheme is being implemented through the National Small Industries Corporation (NSIC) Limited. The main objectives of the scheme are to enhance the marketing competitiveness of MSMEs; to provide them a platform for interaction with the individual/institutional buyers; to update them with the prev-alent market scenario; and to provide them with a forum for redressal of their problems. MSMEs are supported under the scheme for capturing the new market opportunities through organizing/ participat-ing in various domestic & international exhibitions/ trade fairs, buyer-seller meets, intensive campaigns and other marketing events.

International Cooperation (IC) SchemeTechnology Infusion and/or upgradation of Indian micro, small and medium enterprises (MSMEs), their modernization and promotion of their exports are the principal objectives of assistance under the scheme. The scheme would cover the following activities:

y Deputation of MSME business delegations to other countries for exploring new areas of tech-nology infusion/upgradation, facilitating joint ventures, improving market of MSMEs products, foreign collaborations, etc.

y Participation by Indian MSMEs in international exhibitions, trade fairs and buyer-seller meets in foreign countries as well as in India, in which there is international participation

y Holding international conferences and semi-nars on topics and themes of interest to the MSME. IC Scheme provides financial assis-tance towards the airfare and space rent of entrepreneurs

State/Central Government Organizations, Industry/Enterprise Associations and Registered Societies/ Trusts and Organizations associated with the promo-tion and development of MSMEs are eligible to apply.

Scheme of Fund for Regeneration of Traditional Industries (SFURTI)With a view to making the traditional industries more productive and competitive and facilitating their sustainable development, the Government of India has set up a fund for the regeneration of traditional industries. The objective is to organize the traditional industries and artisans into clusters to make them competitive and provide support for their long term sustainability and economy of scale. The objective is also to provide sustained employment for traditional industry artisans and rural entrepreneurs to enhance marketability of products of such clusters by provid-ing support for new products, design intervention and improved packaging and also the improvement of marketing infrastructure. The objective is also to equip traditional artisans of the associated clusters with the improved skills and capabilities through training and exposure visits and to make provision for common facilities and improved tools and equip-ment for artisans in order to strengthen the cluster governance systems with the active participation of the stakeholders, so that they are able to gauge the emerging challenges and opportunities and respond to them in a coherent manner. Funding for the cluster varies from INR 1.5 crore to INR 8 crore in view of the size and scale of the project. The funding pattern


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under the scheme has provision for soft interven-tions including skill training, capacity building, design development, etc. and for hard interventions includ-ing Common Facility Centers, Raw Material Banks (RMB), Training Centers, etc.; and for cross cutting thematic interventions which include brand building and promotion, news/media marketing, e-commerce, innovation, R&D initiatives and developing linkages between clusters.

ASPIRE: A Scheme for Promoting Innovation and Rural EntrepreneurshipA scheme for Promotion of Innovation, Rural Industry and Entrepreneurship was launched by the Ministry of MSME in March 2015. The scheme was formu-lated to set up a network of technology centers and to set up incubation centers to accelerate entrepre-neurship and also to promote start-ups for innovation and entrepreneurship in agro-industry. The scheme emanates from the Finance Minister’s budget speech for 2014-15, in establishing Technology Center Networks to promote Innovation, Entrepreneurship and Agro Industry with a fund of INR 200 crore. ASPIRE is designed to provide the necessary skill sets for setting up business enterprises and also to facilitate market linkages available to entrepreneurs and to provide hand holding for a critical period to ensure self-sustainability.

The most important component is to set up Live-lihood Business Incubators (LBI) under National Small Industries Corporation (NSIC), KVIC or Coir Board or any other Institution/Agency of GoI/State Governments or under PPP mode with these insti-tutions. The next important component is to set up Technology Business Incubators (TBI) at twin levels, i.e. supporting existing incubation centers operated currently under different Ministries and Departments of the Government of India or Institutions including national /regional level institutions of the GoI /State Governments to set up such centers dedicated to incubation and enterprise creation in the area of agro based Industries and also new incubation centers to be set up by eligible private institutions including Industry Associations, along with Academic Institu-tions, R&D Laboratories, Universities, Government entities and Technology Parks. The last important component is to create a framework for Start-up Promotion through Small Industries Development Bank of India (SIDBI) by using innovative means of finance like Equity, Quasi-Equity, Angel Fund, Venture Capital Funds, Impact Funds, Challenge Funds etc. to enable ideas/innovation with creativity and scal-ability to come to the fore and convert these into commercial enterprises with specific outcomes and within a specific time period. The financial support

under LBI is up to INR 1 crore for NSIC and others, and INR 50 lakhs for PPP incubators. For setting up of TBI, the assistance is INR 30 lakhs for existing and INR 1 crore for new incubators. Other financial support includes funds for incubation of ideas of INR 3 lakhs per idea and a seed capital of INR 1 crore for setting up of start-ups by the incubators.

As can be seen from the preceding pages, there are a number of schemes which have been designed to build the competitiveness of MSMEs in the export sector. Yet, the participation of MSMEs from this region in the export sector is relatively insignifi-cant. There are in fact no dedicated data sources which can provide the disaggregated data for MSME exports from the region. Most of the potential for export statistics that the author of this report has cited are anecdotal or based on extrapolation from other/ outdated data sources. There is an urgent need to address this lacunae of authentic export data disaggregated at the state level for MSMEs in the region. This will not only help analyze the situ-ation better, it will also help strategic planning for augmenting the export flow from the region.

North Eastern Region Textile Promotion SchemeThe North-East Region Textile Promotion Scheme (NERTPS) is an umbrella scheme implemented in project mode to promote textiles industry in the North-East Region (NER) by providing infrastructure, capacity-building and marketing support to the indus-try.

Objectives y Develop and modernize the textile sector in the

region y Increase textile production y Technology upgradation y Provide better access to domestic and export

markets y Provide the required government support in

terms of material, machinery, skill development etc.

Eligibility CriteriaThe scheme covers all textile sub-sectors, the tradi-tional VSE sectors of Handlooms, Handicrafts, Seri-culture and Jute and Allied Fibers, as well as the Power loom sector and the Garments & Made Up sector.


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Funding PatternThe expenditure will ordinarily be shared between the Ministry of Textiles and the implementing agency in the ratio 90:10. Release of funds will be done in a minimum of three equal instalments; the first instal-ment being released on sanctioning of the project, and the subsequent instalments on utilization of 70% of the released amount and matching share of the State Government/Implementing Agency together.

The fund would be provided on the basis of physical progress in the project implementation. A specified percentage (5%) of the cost of each project has to be earmarked for Information, Education and Communi-cation (IEC), Administration and Monitoring activity.

Under the scheme an ‘Apparel and Garment Making Center’ (AGMC) is proposed in each of the eight North Eastern states. It would also provide finan-cial assistance to run the units after their commis-sioning. Three hundred Japanese computerized sewing machines will be instaled in each of the eight AGMCs. Of the 300 sewing machines, 200 would be used for manufacturing and 100 for providing training. Each AGMC will provide direct employment to 1,200—1,500 people, mostly women, and take care of skill upgradation and marketing of finished products. Each unit is expected to meet the demand for uniforms and garments of the police, security and paramilitary forces, as also for schoolchildren and civilians in the region.

Niryat Bandhu SchemeNiryat Bandhu Scheme, introduced by Directorate General of Foreign Trade (DGFT) as part of Foreign Trade Policy 2009-14 on October 13th, 2011, aims to reach out to new and potential exporters and mentor them through orientation programs, counseling sessions, individual facilitation, etc., to encourage exports of India. The mentoring of first generation entrepreneurs is provided by the officers of Director-ate General of Foreign Trade (DGFT). Niryat Bandhu invests time and shares knowledge to mentor inter-ested individuals who want to do business in exports. Indian Institute of Foreign Trade has developed an online curricula addressing basic questions related to export markets. This online program enables the entrepreneurs to learn the essentials of export import business from the comfort of their homes, through direct live transmission of the lessons on their desktops. The sessions are followed up by online question answer sessions where experts from IIFT address their concerns. A digital resource library is also available to the exporters online. Some of the sessions of the training program are as under:

y Starting export, import and availing incentives y Commercial regulatory documents in Foreig-

Trade y Promoting exports through WTO compliant

Foreign Trade Policy y Implications of non- tariff barriers for exports y Market identification for exports/imports y Product identification for exports y Developing INTERCOMS in sales contract y Giving IPR protection to your products y How to brand your products to export? y How to reduce export rejections for your prod-

ucts? y How to organise trade logistics? y Letter of credit and implications of UCP-600 y Management of international payment- under-

standing valuation of foreign currencies y Financing for international trade transactions y Currency risk management in international trade y Export finance bank schemes - cost reduction

approach y Preparation of an effective sales contract y Customs clearance y Duty drawback and claims procedure y Checking creditability of buyers and handing

payments defaults: ECGC cover

3.8 Strategy for Cluster Based Export Promotion in the Region

Recent research has revealed that close to 70 percent of MSMEs are present in the form of clusters, hence effective promotion of export potential and value addition in the existing production/manufactur-ing process is optimal when interventions are done through a cluster based approach. Cluster approach also enhances the chances of competitiveness in the global markets substantially rather than support-ing the MSMEs in isolation. Analysis of exports from the region done elsewhere in the report reveals that majority of the export items from the North East Region are primary products. Therefore, a focused approach is needed to translate the primary products into processed products which further can enhance the export value, and thus the income potential of MSMEs. The strategy for export orientation will be a hub and spoke model as detailed below.

Action Plan

Year 1 y Identification of clusters for intervention y Diagnostic study of the clusters y Study on ease of doing business in the NER with

respect to special norms and how to mitigate the same


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y Mapping of government schemes of MSME and export promotion, both at national and state government levels to identified clusters

y Formation of project monitoring and advisory committees comprising entrepreneurs, govern-ment officials, bankers, export houses at the cluster level

y Identifying the scope of green investment and bio-diversity conservation

y Selection and visits of cluster stakeholders to benchmark Indian clusters

y Identification of exporters from or outside benchmark clusters

y Training of entrepreneurs in export promotion

Year 2 y Organize MSMEs and household enterprises

into value chain actors with clear roles and responsibilities for export promotion

y Creation of business linkages of stakehold-ers of clusters with exporters from or outside benchmark clusters

y Solving operational/financial/managerial/tech-nological bottlenecks to production

y Order completion and on the job training of clus-ter stakeholders

y Technical training in creating self-export promo-tion capacity

y Identification of local and external investors as partners

y Preparation of DPR on green investment and submission to banks

y Sector specific buyer-seller meets

An export transaction process is divided into several gradual steps starting with the imports of inputs for exports and culminating with receiving export remit-tances from abroad. The following steps are taken by those involved in processes of exports from India:

y Obtaining different export-import codes and registrations

y Obtaining different licences y Revalidation of export licences y Issuance of export house/trading house certif-

icates y Obtaining various refunds like duty drawbacks

etc. y Getting remittances through banks y Customs clearances y Final dispatch of export consignments

The steps in the export process will need to be incor-porated in the training program to be delivered at the cluster level to build capacities in the clusters for mutual learning and cooperation.

Pictorial Representation of Cluster-based Export Promotion Strategy

Identify the best performing cluster in select sectors

Undertake a detailed need gap assessment analysis

Identify benchmark Indian cluster

Establish market and technical linkage with benchmark cluster

Capture the success stories and methodology of implementation

Formulate policy and scale up in other cluster


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S No. Sector Particulars

1 Agricultural

Marketing

• Agri-Tech Infrastructure Fund (ATIF)• Integrated Scheme for Agricultural Marketing (ISAM)• Rural Godowns Scheme• Terminal Market Complex Scheme• Development of Agricultural Marketing Infrastructure, Grading and

Standardization (AMIGS)

2 Crops &

National Food

Security Mission

• Mission for Integrated Development of Horticulture (MIDH)• National Horticulture Mission (NHM)• Horticulture Mission for North East & Himalayan States (HMNEH)• National Bamboo Mission (NBM)• National Horticulture Board (NHB)• Coconut Development Board (CDB)• Central Institute of Horticulture (CIH), Dimapur, Nagaland• Directorate of Cashew nut & Cocoa Development

3 Integrated

Nutrient

Management

• Mission Organic Value Chain Development for North Eastern Region• Soil Health Management (SHM) Under National Mission for

Sustainable Agriculture (NMSA)• National Project on Management of Soil Health and Fertility

4 Rain-fed

Farming System

• Sub-Mission on Agroforestry (SMAF) under National Mission for Sustainable Agriculture (NMSA)

• Pradhan Mantri Krishi Sinchayee Yojna• National Watershed Development Project for Rain-fed Areas

(NWDPRA)

5 Cold Storage Credit linked back-ended subsidy of 40% (general states) and 55%

(hilly and scheduled states) of capital cost of the project for a

maximum storage capacity of 5000 MT per project at the rate of

INR 6,000 per MT. INR 32,000 per MT for 5,000 MT in case of CA

storages.


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3.9 Institutional Infrastructure for MSME Promotion

North Eastern Development Finance Institution (NEDFi)NEDFi came into being in 1995 and was registered as an NBFC in 2002 with the RBI. It provides advisory services to stakeholders and financial assistance to micro, small, medium and large enterprises for setting up industrial, infrastructure and agri-allied projects in the North Eastern Region of India and also microfinance through MFIs/NGOs. As of 2015, NEDFi has disbursed over INR 2710 crore spanning over 4000 different projects in the region. NEDFi also promotes the North East at various fora and plat-forms and also promotes R&D. NEDFi has a business facilitation center in every state of the NER. Here, experienced mentors provide handholding support to potential entrepreneurs. This Business and Finance Center (BFC) provides guidance in managerial, tech-nical, financial, commercial and marketing; and even for preparation of Detailed Project Report (DPR) and credit linkages in places where professional experts are unavailable.

North Eastern Regional Agricultural Marketing Corporation Ltd. (NERAMAC)NERAMAC came into being in 1985 to support farm-ers and facilitate market linkages to enhance and improve the agriculture scenario in the region. NERA-MAC is primarily involved in processing and market-ing of agricultural products in the NER. NERAMAC helped local food processing units by marketing their products in identified domestic markets through its own retail outlets. NERAMAC intervenes in sourcing, procuring and marketing different agro-horticultural commodities produced by the farmers of pineapple, ginger, banana, chillies, black pepper, cashew nuts etc. and minor forest produce like hill grass. It also supports the farmers with agricultural inputs like seeds, fertilizers etc. NERAMAC also assists farm-ers producing planting materials under Horticulture Mission Schemes by marketing their produce.

NERAMAC implements training programs specifically Fruit Preservation Training Program for growers/entrepreneurs who intend to set up micro processing facilities. This program provides general awareness in food processing covering regulations, agro food processing industries management, quality/systems etc. These programs are modeled for fruit and vege-table processing.

Upcoming Projects y Central Packaging Center, Guwahati y Multi-fruit Processing Plant, Silchar, Assam

y Restructuring & Modernization of the Pineapple Juice Concentration Plant, Nalkata, Tripura

Department of Agriculture, Cooperation and Farm-ers’ WelfareThe Department of Agriculture and Cooperation (DAC) is one of the three constituent Departments of the Ministry of Agriculture, the other two being the Department of Animal Husbandry, Dairying & Fisheries (DAHD&F) and Department of Agricultural Research and Education (DARE). Its main goal is promoting growth and boosting agricultural growth in the country by means of various schemes and guidelines. Relevant ongoing schemes include:

National Bank for Agriculture and Rural Develop-ment (NABARD)NABARD was set up in 1982 to promote sustainable and equitable agriculture and rural prosperity through effective credit support, related services, institu-tion development and other innovative initiatives. NABARD provides investment credit in the following domains:

y Dairy Entrepreneurship Development Scheme y Commercial Production Units of Organic Inputs y Rural Godowns y Agriculture Marketing and Infrastructure Grad-

ing and Standardizations y Agriclinic and Agribusiness Centers Scheme y Agricultural Marketing Infrastructure

National Horticulture Board (NHB)The NHB was set up by the Government of India to promote and boost the horticultural scenario in India by developing horticultural belts, infrastructure, nurseries, post-harvest management infrastructure, marketing of produce, promotion of field trials, tech-nology transfer etc.

Horticulture Commercial SchemeThis focuses on credit linked projects relating to establishment of commercial production units in open field as well as under protected conditions and projects on post-harvest management and primary processing of products

y Commercial Horticulture Development in open field conditions on project mode - credit linked back-ended subsidy @ 40% of the total proj-ect cost limited to INR 30 lakhs per project in general areas and @50% of project cost limited to INR 37.50 lakhs in the North East region, Hilly and Scheduled areas.


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y Commercial Horticulture Development in protected cover on project mode - credit linked back-ended subsidy @ 50% of the total project cost limited to INR 56 lakhs per project as per admissible cost norms for green houses, shade net house, plastic tunnel, anti-bird /hail nets and cost of planting material etc.

y Integrated post-harvest management projects

Cold Storage SchemeCredit linked projects relating to Cold Storages includ-ing Controlled Atmosphere (CA) and their moderniza-tion are eligible for assistance under this component. The subsidy need not be credit linked for institutions like Public Sector Units, Panchayats, Cooperatives, Registered Societies/Trusts and Public Limited Companies provided they can meet the remaining share of the project cost out of their own resources. Such projects will have to be appraised by an apprais-ing agency approved by the NHB.

Assistance will be given as subsidy @ 35% of the capital cost of project in general areas and 50% in case of North East, Hilly & Scheduled Areas for a storage capacity above 5000 MT up to 10000 MT.

Market Information Service for Horticulture Crops This is to collate and maintain data and information on wholesale prices, arrival, yield in various markets of the country for fruits, vegetables and flowers specifically with 100% cost of the study covered by the Board.

Horticulture Promotion ServicePromotes specialized studies and surveys for use by targeted beneficiaries with 100% cost of the study covered by the Board.

Ministry of Food Processing Industries (MoFPI)The Ministry of Food Processing Industries is concerned with the formulation and implementation of the policies and plans for the food processing industries within the overall national priorities and objectives. It focuses on policy and developmental support for formulation and implementation of poli-cies for food processing sector with overall national priorities and objectives, and facilitating creation of a conducive environment for healthy growth of the food-processing sector. Relevant schemes by MoFPI include:

Mega Food ParkA mechanism to link agricultural production to the market by bringing together farmers, processors and retailers so as to ensure maximizing value addition, minimizing wastage, increasing farmers’ income and

creating employment opportunities particularly in rural sector.

y Focus on cluster approach to develop horticul-tural processing units

y Onetime capital grant of 50% of the project cost (excluding land cost) subject to a maximum of INR 50 crore in general areas and 75% of the project cost (excluding land cost) subject to a ceiling of INR 50 crore in difficult and hilly areas i.e. North Eastern region including Sikkim, Jammu & Kashmir, Himachal Pradesh, Uttara-khand and ITDP notified areas of the states.

Cold Chain SchemeThis aims to provide integrated cold chain and preser-vation infrastructure facilities without any break from the farm gate to the consumer, covering pre-cooling facilities at production sites, reefer vans, mobile cooling units as well as value addition centers which include infrastructural facilities like Processing/Multi-line Processing/ Collection Centers, etc. for horticulture, organic produce, marine, dairy, meat and poultry etc. Individuals, groups of entrepreneurs, cooperative societies, Self Help Groups (SHGs), Farmers Producer Organizations (FPOs), NGOs, Central/State PSUs etc. with business interest in cold chain solutions are eligible. Financial assistance is provided (grant-in-aid) of 50% the total cost of plant and machinery and technical civil works in general areas and 75% for the North Eastern region includ-ing Sikkim and difficult areas (Jammu & Kashmir, Himachal Pradesh and Uttarakhand) subject to a maximum of INR 10 crore.

Value Added Center Scheme25% of the cost of plant and machinery and technical civil works for setting up such centers subject to a ceiling of INR 50 lakhs in general areas and 33.33% subject to a maximum of INR 75 lakhs in difficult areas is provided.

Packaging Center Scheme 25% of the total cost of plant and machinery and technical civil work in General Areas and 33.33% in Difficult Areas is provided, subject to a maximum of INR 2 crores, for establishing packaging centers inde-pendently and in food parks (where the packaging center is not already a part of the common facilities).

Lack of access to global trade opportunities, trade intelligence and worldwide market demand

CHALLENGES INEXPORT PROMOTION


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The barriers to exports are many, such as lack of reliable data on overseas markets, inabil-ity to contact potential overseas customers, unfamiliarity with export rules, procedures & documentation, lack of trained export staff for trade facilitation, difficulty identifying foreign business opportunities, insufficient access to export finance etc.

Some of the barriers are about perception, some related to lack of knowledge & information, while some about lack of holistic and end-to-end global trade solutions for SMEs.

When exporting in a developing nation like India, lack of access to global trade opportunities, trade intelligence and worldwide market demand are significant information barriers faced by SMEs. This lack of information could have potentially high implications. SMEs need to know about procedures, documentation, specifications, rules, regulations, standards etc. in the target country or they risk trade execution or worse, product rejection.

Similarly, lack of information on export opportunities in the global market could result in high marketing and opportunity cost of targeting the wrong market and of missing the right one. Finally, lack of trade facilitation or access to global trade resources to help execute end to end transactions dissuades SMEs to venture into uncharted territories.

Based on interactions with a number of exporters in the region, it is evident that the lack of export infrastructure remains the major problem for export promotion from the NER. Infra-structural constraints in most of the Land Customs Stations (LCSs) are lack of weigh bridges, good dumping ground, cold storage warehouses, loading / unloading facilities, truck parking space in the various LCSs, drinking water facilities, electricity, credit availability for export financing, medical and telecommunication facilities, to name a few. Absence of warehouses and cold storage facilities pose serious problems for exporters of perishable commodities. Inadequate infrastructural support has been the immediate cause of low volume of trade. In fact, this is the sole reason which has made a few of the LCSs defunct. Inadequate infra-structural support in the LCSs in neighbouring nations is also a reason for low volume of trade in some LCSs and lack of trade in others. Added to this lack of infrastructure is the lack of coordination among various agencies relating to exports, and this is another infrastructural bottleneck. Additionally, law and order, and other situations, insurgency etc. create numer-ous problems for export trade. Lack of awareness of export / import related information, marketing strategies and banking facilities are also some of the other drawbacks for growth of export from the NER. Export related problems can be tackled only through improved and integrated trading infrastructure, which is responsible for faster movement of goods and services across the nations.

Trade liberalization has eliminated most of the distortions that a protectionist tariff system imposes on international business. However, nowadays non-tariff barriers represent a consid-erably larger barrier to trade than in past decades. Some of the major issues highlighted by exporters are summarized below:

Illegal / Unofficial TradeIllegal / unofficial trade exists between the NER and neighbouring countries. Although it is difficult to arrive at any estimation of the volume of unofficial trade, such trade is substantial. It has covered most smuggling prone bordering districts of Assam, Manipur, Meghalaya, Mizoram and Tripura.


Digital technology provides an important new method for overcoming some of the barriers to small firm finance. Technology also means that scaling up is both feasible and desirable.


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Statutory Requirement of TradeAt present, there is no quarantine office to issue a clearance certificate for exporting of agricultural / floricultural / horticultural items in Guwahati. In the entire NER, such facilities are at present avail-able only in Karimganj and Agartala. As Guwahati is regarded the gateway for the entire North East, a separate quarantine office may be set up for offering such facilities on Phyto- Sanitary measures.

Banking TransactionWith a view to create adequate banking infrastruc-ture for international trade and border trade in the NER, the banks functioning in this region should have corresponding arrangements with banks in neigh-bouring nations. At the moment, these corresponding relationships are restricted to the banks functioning in Kolkata.

Limited Items under Export TradeA few numbers of items are offered for export in rela-tion to the total export basket of the NER. The major-ity of items offered for export are not even exported from any of the sources of origin in the NER, although the items have been included in the export list.

Transportation BottleneckFrom the survey, it can be concluded that the trans-portation bottleneck remains the major problem of trade from the NER to Bangladesh, Bhutan and Myanmar. All the roads leading to different LCSs are in deplorable conditions. There is also frequent disruption of communication due to natural calam-ities. The roads from Karimganj to Sutarkandi LCS in Assam, Jowai, Dawki road in Meghalaya, Rahna Bazar in Tripura, Imphal to Moreh, Mon to Lungwa and Kohima to Pankhungri and Molei in Nagaland need to improve by widening and double laning to enable commencement of trade with emerging South Asian nations.

Illegal Taxation Illegal taxation is a cause of major concern as it prohibits legal trade to flourish. Legal traders are of the opinion that illegal trade often overtakes legal trade in a liberal atmosphere. There are also chances of high rate of growth of legal trade after the removal of illegal restriction on border trade. This will accel-erate the general economic activities of this region because of inter-sectoral linkages and owing to push factors.

Access to FinanceFor small firms, finance is inherently challenging because of the moral hazard and other asymmet-ric information problems in financial contracting (of course these have been exploited by large firms in India, as we have seen). Digital technology provides an important new method for overcoming some of the barriers to small firm finance. Technology also means that scaling up is both feasible and desir-able. The relative advantages of personal relation-ships and local knowledge become less important. In short, financing does not have to be local, and should not be. The government has created its own electronic exchange for small firm finance, the Trade Receivables Discounting System (TReDS), but much more is needed. Luckily, it seems that new firms are entering this space with a range of business models and approaches to filling some of the gaps in the financing ecosystem, including matching borrow-ers and lenders, and setting prices. Even without significant infusions of outside capital, these firms have the potential to remove some of the friction that plagues small firm financing. There is a need to encourage the entry and growth of financial firms that improve the workings of supply chain finance. Anything involving finance requires regulation, but the key to policy here will be to ensure that regulation is light handed but effective. Ultimately, better mech-anisms for smaller firm financing will transform the economy, and support export led job growth.

Access to MarketsMarketing is one of the critical areas where MSMEs face problems. In the global arena, they do not have the strategic tools and the means for their business development, unlike the large enterprises. Constant changes in the market dynamics due to technologi-cal changes and globalization have had a profound impact on the competitiveness of MSMEs. The whole gamut of marketing strategies for any product is required to be addressed whether it is product differ-entiation, incremental features of the product, brand-ing issues, customized and tailor-made services, clientele building, post-sale servicing etc. The exist-ing scheme of support requires to be harmonized and rationalized to have a focused approach. The existing marketing support institutions would also need to be revisited with a view to strengthening the marketing infrastructure for the MSME sector and mainstream it to the major consuming areas and patterns.

‘Act East’: Hope rekindled for sustainable economic revival

CONCLUSIONS


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JACKFRUIT

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Historically, the North Eastern region of India was a central node in the global network of economic interactions at the beginning of the twentieth century. Political and social changes over the last century have deeply impacted the region. Its relative isolation in the inter-vening decades have led to a lag in economic growth. Subdued economic growth, ethnic strife, geo-political significance have all had their impact on the nature and evolution of the economic, institutional and infrastructure in the region. Recent initiatives termed as ‘Look East’ and now ‘Act East’ have rekindled hope among the experts and the person on the street alike that the region is at the cusp of a long term sustainable economic revival. The region is endowed with a rich and diverse resource base which needs to be unlocked with care and sensitivity. The challenges of integration into the national and global marketplace are signifi-cant, and the journey has to be navigated with gentle but firm steps. The strategy highlighted in the pages above needs to be calibrated and customized based on the context prevalent in each state, and respond to the specific challenges in each sector. What is common to all the sectors is a relative lack of awareness of opportunities that exist in the global markets and how MSMEs can leverage on this new found knowledge.

The strategy needs to operate at two levels:

y ASEAN and BIMSTEC region – India’s North East region has a natural advantage due to the geographical proximity to the region, hence a high volume low margin strategy for penetration of these markets can inform the first level of intervention – building infrastructure, simplification of procedures, improved access to finance to name a few.

y EU, US, UK and Japan – These are developed markets where the advantage of geograph-ical proximity is not available and all primary producers are eying this lucrative market. In order to penetrate this market, significant investment in quality control, technology, organic certification and market intelligence is required. The Geographical Indication1, ethical trading, sustainability certification are some of the differentiators which need to be developed in order to capture these markets due to a growing sensitivity towards people and the planet especially in these countries.

Lastly the region will need to build on the existing networks and harness the individual strengths and complementarities at both the enterprise as well as the state level to create a brand North East to make a significant dent in the global marketplace. Individual stories of excellence will need to be studied in depth and lessons learnt be captured and disseminated rapidly to scale up the efforts in a fiercely competitive and dynamic context of international trade and commerce. Governments at both national and state level are keen to support the export community and broad base the basket of exports from the region. Taking advantage of these windows of opportunities will make exports from the region attain their deserved place.

1 Ageographicalindication(GI)isasignusedonproductsthathaveaspecificgeographicaloriginandpossessqualitiesorareputationthat are due to that origin. In order to function as a GI, a sign must identify a product as originating in a given place

CONCLUSIONS

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Unlocking Export Potential in the North East: The MSME Way

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