India-Japan talks on NE investments soon

Japan has been an active investor in India’s Northeast with much of its activities concentrated in agriculture, agro-economy, tourism and urban development projects. However, Japan has unveiled an ambitious new connectivity initiative, the “Bay of Bengal-Northeast India Industrial Value Chain”.

The initiative was announced during prime minister Fumio Kishida’s visit to India in March.

“Northeast India, which is surrounded by land, still has unexploited economic potential. Viewing Bangladesh and other areas of the South as a single economic zone, we will promote the Bay of Bengal-North East India industrial value chain concept in cooperation with India and Bangladesh in order to foster growth in the entire region,” said Kishida, while delivering the Sapru House Lecture organized by the Indian Council on World Affairs (ICWA) in New Delhi.

Japan plans for a new industrial and manufacturing zone that includes Bangladesh and India’s Northeast. Japan is looking to attract regional investment moving out of pricier South-east Asian markets like Thailand to the Bay of Bengal.

According to persons aware of the matter, increased investments in the Northeast, particularly in connectivity, may be discussed at the Act East Forum later this year.

The Bay of Bengal-Northeast India Industrial Value Chain may also be up for discussion.

This new initiative requires a two-pronged strategy. First, infrastructure connectivity projects will be coordinated and linked by the governments of India, Bangladesh and Japan. Tokyo, which is funding road development in India’s Northeast, is also a major infrastructure investor in Bangladesh. For example, Tokyo played a key role in building Bangladesh’s Matabari port, which will allow easier seaborne exports to regional and global markets. The Japan International Cooperation Agency (JICA), which financed the construction of Matabari, aims to support Indian companies in establishing a more robust presence in the Bay of Bengal region. Through coordinated infrastructure development and enhanced connectivity, these three nations aim to create a solid foundation that will attract private investments to both Bangladesh and the Northeast region of India.

Additionally, the three capital cities are collaborating to eliminate policy barriers that hinder investments. Bangladesh is currently exploring trade agreements with both India and Japan, with the aim of stimulating economic activity in the region.

The project holds strategic significance, particularly considering China’s economic influence in Southeast Asia and the wider Indo-Pacific region. By attracting Japanese investment to India and Bangladesh, as well as exporting to markets within the Bay of Bengal region, the objective is to bind regional economies together. This closer economic integration serves as a strategic response to China’s growing presence in the region.

Updated: 28 May 2023, 10:19 PM IST