The northeastern region of India is mostly addressed by the name – The Seven Sisters – comprising of Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura. My first thought of the Seven Sisters is the abundance of a magnificent landscape, exotic flora and fauna and rich cultural heritage. As far as commerce is concerned, there is fishing along the Brahmaputra, oil refinery, rice, rubber & bamboo cultivation, coal, gas, fruits & vegetables, and a plethora of other trade opportunities that can convert the Northeast into a commercial hub. In this piece, we take a look at factors that are holding back the Northeast from shining and discover areas to be worked upon.
I have been rather fond of taking out ‘me-time’ once in a while and pouring myself a glass of fine wine. Never did it come to my mind – what is the story of this particular bottle? – similar to most people. But I had to research a winery in the calm of Ziro Valley (Arunachal Pradesh) sometime back for a work-related assignment. What I came to know was thought-provoking.
Let me take you a few years back in time, to the year 2017. In the peaceful and picturesque Northeast, lies the secluded Ziro Valley in the lower Subansiri district of Arunachal Pradesh. Out of the ~9,000 tonnes of Kiwi fruit produced yearly in Arunachal, 26% comes from the Subansiri district, however, due to lack of demand, the fruit has often been retracted from the markets and dumped.
This was until an agricultural engineer in the district realized the fruit’s potential and thought of turning it into wine so as to sustain Kiwi farming in the State. But bottling the wine was a major hurdle as glass bottles could not withstand the poor road conditions in the State. After an intensive search, she came across Chinese made bottles which, though costlier than Indian bottles, were somewhat better in sturdiness as well as elegant. Kolkata, being the nearest major commerce hub to Arunachal, received the consignment, but it took some effort and double the money to have them transported 1,400 km away at an altitude of 5,434 feet. The final delivery of around 40,000 bottles was still short of almost 15% of the order, as they were completely crushed in transit, and to top it off, she could not find another transported for months to deliver the rest of the stock sitting in Kolkata.
The story – inspiring at first – made me wonder how a region with such great commerce prospects has been neglected time and again on the logistics front, hampering the reach of the abundant output that it generates. In 2018, the Ministry of Commerce & Industry flagged off the first Logistics Ease Across Different States (LEADS) Report. Since its inception, the report has been an indispensable instrument for analyzing the state-wise logistics performance, stakeholder engagement and formulating action plans, all on the basis of input received from industry consumers and service providers. Let’s see how the Northeast has fared in the previous and current editions of the Report over the years.
When it was first published in 2018, the Report ranked the collective Hilly East cluster (Tripura, Mizoram, Meghalaya, Manipur, Nagaland, Sikkim and Arunachal Pradesh) at 1.97 on the index, much lower than the average rank of 3 among the other states.
A major factor for the poor performance of the Hilly East cluster was deduced to be the dis-economies of scale, largely meaning, that the cargo volumes were possibly not conducive for developing a logistics infrastructure based on the market in these states. The remedial action suggested was establishing a hub-and-spoke logistics network in the area for increased reliability of logistics services. Respondents in the LEADS 2018 study observed the low index ranking of the Hilly East cluster due to difficult terrain and quality of infrastructure in the region, although the number of responses received was not enough to make a meaningful assessment of particular components taken into consideration.
Fig: A breakdown of Hilly East’s score on the LEADS index, 2018
It was noticed that a major hurdle was the situation of road infrastructure when it came to logistics. For instance, Tripura produced 15-20 million kg of tea annually and the route taken to transport it to Kolkata took 7-8 days, which eventually increased the cost of logistics. An alternate route via Bangladesh was suggested, which would, in contrast, take only 2-3 days. The condition in almost all the north-eastern states was the same and drivers totally avoided turfing the area due to poor operational conditions. Only Tripura was perceived to be better in the entire region. There was also a dire need to develop state-of-the-art warehouses, especially for the storage of perishable items.
To summarize, even back in 2018, the Hilly East cluster was signalling a red alert on parameters like infrastructure & services, safety & ease of track and trace, operating environment and regulatory efficiency.
This is an abridged version of the original article that was published in the December edition of the Logistics Insider magazine. To read the complete article, click here.