Northeast India in last 15 years tried hard to woo big investors. It has rolled red carpet for big industries, industry bodies has gone to different cities of India showcasing its potentialities to Corporate India.

But 15 years down the line, the industrial scene of the region is yet to change much. Investments have not trickled in the way it should have been despite the fact the industries get subsidies and incentives for operating in the region.

Crores of rupees have gone in arranging investors? conclave and seminars and the there have been thousands of expression of interest. But after all this exercise, the policy markers now have realized that there is no point in wooing big industries rather they must concentrate on promoting micro, small and medium enterprises (MSME) sector.

With lot of fanfare Assam hoisted the Assam Investment Advisory Board (AIAB). The event of 2010 witnessed some high and mighty of Corporate India and the country?s finance spectrum: Ratan Tata, M S Banga, Rakesh Mittal, Naina Lal Kidwai, O P Bhatt and B M Khaitan, all came down to Guwahati to chalk out an investment strategy for the state.

However two years down the line nothing concrete seems to be translated on ground.  Repeated promises that Northeast India has potential echoed by big corporate houses has poised a big question is Northeast India caught in misplaced priority. Did the policy makers fail to identify the core competency factor of the region?  

Eight states of Northeast India are now vying for investment policy shift.  Industry ministers of the region after the mid term diagnosis of the North East Industrial and Investment Promotion Policy (NEIIPP) 2007 has decided to move Government of India requesting revision the NEIIPP.  

The policy shift is explained by Chairman of forum and Assam industry minister, Pradyut Bordoloi said that, ?Big industries need large lands which are difficult to get in hilly tract of Northeast. Thrust now will be to promote MSME sectors which do not require much land?.  

Bordoloi argued,? To facilitate first generation entrepreneurs in setting up MSME units we have proposed to set up MSME bank branches in all the district headquarters of the region. Provisions for providing micro credit to these entrepreneurs.?

A close look of investment flow in last five years points out that under NEIIPP the region has received 336 private sector investment proposals worth `38,000 Crore. Among the Northeastern states Assam attracted maximum investment proposal with `21, 152 Crore.

At least 70 percent of the proposals are in various stages of implementation and 30 percent are in pipeline. Sikkim has established its place in the pharmaceutical industry and emerged as the hub of pharmaceutical industry. Out of 40 proposals in this sector, Sikkim has corned 35 proposals.

Cement companies made beeline in the region. There were as many as 50 proposals. Assam alone got 28 proposals.  Besides there were proposals in power, hotels and resorts, plastic based industries.

Bordoloi said that investment proposals have come for healthcare sector. There are at least 10 them of which 7 proposals are for Assam. ?Assorted proposals have come from sectors including Aluminum, asbestos, baby dippers, bio diesel, cold storage, cosmetics, paper Kraft, food processing, jute based industries, latex industries. There are 81 such proposals.?
Confederation of Indian Industry (CII) has supported the move of Northeast India industry ministers for inclusion of MSME sector under the ambit of North East Industrial and Investment Promotion Policy (NEIIPP) 2007.

Abhijit Barooah, Co Chairman, CII North East Council & Managing Director, Premier Cryogenics Limited stressed that the existing and potential industrial demography of the North East is essentially MSME.

He added that it is imperative that the NEIIPP be made friendly for the MSME sector, which till now has not been able to garner much benefit owing to the cumbersome procedures and numerous paper works involved.

Barooah added transport subsidy accounts for almost 86 percent of the total disbursement released against only 7 percent towards capital investment subsidy, which showed lack of capital investment disproportionate to total subsidy disbursed.

Barooah suggested that provisions should be made for extending transparent and productive subsidies like, power Subsidy, Interest subsidy on term loans, reimbursement of Employees? Provident Fund (EPF), Employees? State Insurance Scheme (ESIC) and other employee related statutory dues within the ambit of the NEIIPP.

This would not only benefit the MSME sector immensely but at the same time also ensure that the over emphasis on Transport subsidy is reduced.  

CII also supported the initiative to include traditional strengths of the region like music and sports within the ambit of the policy.

Transport subsidy Scheme (TSS) is facing severe criticism. Leakage in the transport subsidy scheme is hogging limelight. However the proponents of this scheme which includes Industry bodies in Northeast India are asking Government of India not to limit the quantum of the TSS.

Following allegation of anomalies Assam government has not cleared the subsidy claims since last two years. The government of India is contemplating to limit quantum of transport subsidy following allegations of large scale leakages in the scheme.  

The industry ministers? forum admitted that there have been lacunae and leakages in the policy. The chairman said, ?We will put a system in place to ensure those lacuna and leakages are plugged.

Leakage in the transport subsidy scheme is hogging limelight in the Northeast and Government of India.  Federation of Industry and Commerce of North eastern Region (FINER), North Eastern Small Scale Industries Association (NESSIA) and All Assam Small Scale Industries Association (AASSIA) in a memorandum to Shubhra Singh, Joint Secretary, Department of Industrial Policy and Promotion Ministry of Commerce and Industry requested not to cap the transport subsidy.

According to the industry bodies, TSS is provided for compensating the additional high cost of transportation incurred by the North East industries. 

According to the body,? We understand that TSS is being amended. We would like to request that while there should be no cap whatsoever either on the quantum of TSS or on the transportation cost of raw material. The quantum of transport subsidy should not be liked to employment generation clause because every State Government has got its own employment policy. The designated rail head of Siliguri alone should continue and no other rail head should be designated.?

In the fiscal year 2008-09 transport subsidies to the tune of `974.82 Crore were disbursed, this increased to `1209.49 Crore in fiscal year 2009-10. The industry bodies stated in 2010 a North East Industries Ministers? Conclave was held at Guwahati under the Chairmanship of Union Commerce & Industry Minister, Anand Sharma. The minister assured that the matter would be re-considered and the benefits under TSS, 1971 and NEIIPP, 2007 would not be diluted.

Another meeting was held by DIPP with the Commissioners/Secretaries of a Northeast States. According to the industry bodies, Dr. Mukul Sangma, Chief Minister of Meghalaya, Pradyut Bordoloi, Industry Minister of Assam, Jitendra Chowdhury, Industry Minister of Tripura and Vincent Pala, Union minister of state for Water Resources also met Prime Minister, Dr Manmohan Singh. Prime Minister assured them that NEIIPP and TSS will not be diluted.

The bodies argued that the NEIIPP and TSS are closely inter-linked and industrialization in Northeast India can flourish only if both these Schemes work together.  

Sunaina