India’s Act East policy, launched in 2014, outlines a multifaceted approach that ranges from expanding cultural links to improving trade ties and transport connectivity.
The northeastern region of India, as stated by Prime Minister Narendra Modi in February this year, is at the heart of the Act East policy. As part of the policy, the government is working on plans to link the region through land, air and water with other economies, particularly those of Southeast Asia. Additionally, as stated by Assam Governor Jagdish Mukhi, a plan to develop Assam as a major hub for trade with the 10-nation Asean bloc is being worked on.
Similar to India’s Act East Policy is Taiwan’s New Southbound policy, which seeks to boost trade links with countries listed in the policy, in order to achieve sustained economic growth and to transform its economic model with a focus on innovation and original branding. As such, ample synergies between the New Southbound policies and Act East policies exist. Trade and economic ties between India and Taiwan have been on the upward swing for many years, and further reinvigoration could look at leveraging Taiwan’s strengths to propel the Act East policy forward. Trade between the two sides increased from US$1.2 billion in 2000 to $6 billion in 2016 and there are nearly 90 Taiwanese companies working in different sectors of the Indian economy.
Taiwan’s strengths in the form of huge foreign reserves, along with expertise in hardware manufacturing, infrastructure, construction, food processing, automobiles, etc, could be leveraged to boost the potential of the northeastern region. A major component of Indian exports is agricultural commodities. Additionally, agriculture accounts for about 55% of jobs. The northeastern region performs well in the production of agricultural goods, but exporting them remains a challenge that needs to be addressed.
An announcement by the prime minister concerning the development of exports from the northeastern region in January 2000 led to the setting up of the Export Development Fund (EDF), the primary objective of which was promoting exports from the region. Forty-seven projects have been sanctioned under the EDF so far. The proposals for funding through the EDF that have been approved include passionfruit in Mizoram and Nagaland, safed musli in Assam, ginger in Manipur and Nagaland, cluster development of farms for organic farming in Nagaland and Tripura, etc.
Additionally, agri export zones (AEZs) have been set up for the region in Tripura for pineapples, Sikkim for floriculture, ginger and cherries, and Assam for fresh and processed ginger. However, despite the efforts, the northeastern states have not been able to achieve much growth in the sector due to inherent weaknesses that include poor marketing linkages, lack of infrastructure and lack of awareness. If Taiwanese expertise in food processing and logistics could be utilized, then benefits for the northeastern region could be greater, as the region’s foreign trade development could be expedited.
For the re-establishment of trade, connectivity is very important. In fact, the realization of this is the reason behind the government considering linking Guwahati with all the major Southeast Asian countries with flight services
Even in terms of improving the connectivity of the region, Taiwanese expertise and investment could be a solution. In 1950, the per capita income of undivided Assam was much higher than the national average. However, the region began lagging behind after independence as traditional trade routes with countries in Southeast Asia were severed. This in itself is telling as to how important foreign trade is for the region. For the re-establishment of trade, connectivity is very important. In fact, the realization of this is the reason behind the government considering linking Guwahati with all the major Southeast Asian countries with flight services, as a part of a plan to improve connectivity to the northeast and boost the region’s trade prospects.
A memorandum of understanding to set up the India-Japan Act East Forum, with the aim of wedding India’s Act East Policy with Japan’s Free and Open Asia Pacific Strategy is among the major agreements signed during Prime Minister Shinzo Abe’s visit to India in 2017. The purpose of the forum is to enhance connectivity and to promote developmental projects in India’s northeast.
A cue from the India-Japan Act East Forum could be taken to formulate something similar with Taiwan. President Tsai Ing Wen announced in 2016 that Taiwan seeks to expand its dynamic relationships with India and Asean. A closer alignment of the Act East policy and the Southbound Policy would lead to win-win cooperation for both the sides. As India pushed forth with the Act East policy in the northeast, it would do well to take Taiwan on board to maximize the region’s potential.