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An Introduction to Arunachal Pradesh Economy

Arunachal Pradesh – State profile

• Covering an area of 83,743 sq km, Arunachal Pradesh is the largest state in the Northeast India.
• The state is located in the extreme Northeastern corner of the country. It shares its border with the neighbouring countries of Bhutan in the West, China (Tibet) in the North and Northeast, Myanmar in the East and Southeast and the Indian states of Assam and Nagaland in the South.
• Itanagar is the state capital. Arunachal Pradesh has 16 administrative districts.
• Naharlagun, Tawang, Tezpur, Bomdila, Ziro, Pasighat and Tezu are the major towns in the state.
• Brahmaputra is the major river flowing through the state. Other smaller rivers include Kameng, Subansiri, Lohit and Tirap.
• The most commonly spoken languages are Assamese, Bengali and Hindi. English is the primary medium of education in the schools

Rich and varied agro-climatic conditions

• Undulating topography and varied agro-climatic conditions offer vast potential for horticulture and growing a variety of fruits, vegetables, spices, aromatic and medicinal plants, flowers and mushroom.

Policy and fiscal incentives

• The state offers a wide range of fiscal and policy incentives and assistance for businesses under the State Industrial Policy, 2008. Additionally, the state has sectorspecific policies for industries related to power and agriculture.

Facilitating industrial infrastructure

• The state has 12 industrial estates, established across districts. To support industrial growth, the State Government has also notified integrated infrastructure development centres, industrial growth centres and industrial areas.

International trade opportunities

• The geographic location of the state provides immense opportunities for international trade with the South Asian countries through its shared borders with Myanmar, Bhutan and China.

Key industries in Arunachal Pradesh

• The resources, policy incentives and climate in the state support investments in mining and mineral products (including cement), tissue culture and floriculture, plantation crops (tea, rubber, etc.) and agro-based industries.
  • The North Eastern Development Finance Corporation Limited is engaged in catalysing the industrial growth of the Northeastern region (including Arunachal Pradesh) by providing counselling, timely advice and assistance for building quality enterprises.
  • The Department of Industries, Government of Arunachal Pradesh, is responsible for promoting industrial activities in the state to provide employment opportunities to the rural and urban people.
  • The Department of Industries has set up district industries centres (DICs) and sub-district industries centres (sub-DICs) for the industrial development of small scale, tiny and village industries.
• Key industries in Arunachal Pradesh
• Art and crafts
• Weaving
• Cane and bamboo
• Carpet weaving
• Wood carving
• Ornaments
• Tourism
• Horticulture
• Saw mills and plywood

Employment profile of Arunachal Pradesh

• The primary sector employs around 67.4 per cent of the total workforce in Arunachal Pradesh, followed by tertiary sector (23.9 per cent) and secondary sector (8.7 per cent).
• Around 94 per cent of the state‟s population lives in the rural belt. Thus, agriculture is the main occupation of the people of Arunachal Pradesh.
• Of the total workforce, 60.4 per cent are cultivators with self-owned land and only 5.1 per cent of the workforce falls in the agricultural labourer category.

Cereals, oil seed and sugarcane are the key agricultural products

• In 2009-2010, total production of cereal crops was 325,000 tonnes, compared to 306,500 tonnes in the previous year.
• Major cereal crops of the state are rice, maize, millet, wheat and pulses (pea, kidney-bean and black-gram).
• Non-cereal crops include ginger, oil seed and sugarcane, apart from vegetables.

Road network

• Arunachal Pradesh has a road density of 17.36 km per 100 sq km.
• Six National Highways run through Arunachal Pradesh, connecting the state with the rest of India as well as the international borders with China (Tibet), Myanmar and Bhutan.

Airports and railways

• In December 1995, the State Government introduced passenger flight services by nine-seat Dauphin helicopters to overcome the constraints posed by the hilly terrain.
• Later a 23-seat MI-172 type helicopter had been added to the fleet, primarily to operate between Guwahati in Assam and Tawang in Arunachal Pradesh.
• The service also connects 29 major towns including Naharlagun, Tawang, Ziro, Pasighat, Bomdila, Seppa, Daporijo, Along, Yingkiong, Roing and Tezu.
• A greenfield airport has been proposed near Itanagar, for which environmental clearance has been received in April 2010. Ministry of Civil Aviation has also planned to operationalise airports at Daporijo and Tezu.
• The nearest railway station is located at Harmoti in Assam, 23 km from Naharlagun and 33 km from Itanagar.

Industrial infrastructure

• Arunachal Pradesh has 12 industrial estates located in different districts and spread over total area of 55.6 hectare. These industrial estates have been developed in land-areas ranging from 4,540 to 202,325 square metre, with the primary objective of growth and development of small scale industries.
• In addition, the State Government has also notified integrated infrastructure development centres, industrial growth centres and industrial areas to support industrial growth.
• The State Government has set up district industries centres (DICs) in all 16 districts. These DICs play a vital role in the industrial development by providing services to the entrepreneurs viz., identification of suitable schemes, preparation of project report, arrangement for providing required plant, machinery and raw-material, assistance in availing incentives and facilities provided by both central and state governments, liaison with all development departments and financial institutions to provide assistance to the prospective entrepreneurs.
• Based on availability of resources, the State has identified thrust areas for industrial development:
• Industries based on agricultural, horticultural and plantation produce.
• Industries based on non-timber forest produce such as bamboo, cane (rattan), medicinal plants/herbs, aromatic grass, tea and coffee.
• Industries based on locally available raw-materials except timber.
• Textiles (handlooms and power-looms), handicrafts and sericulture.
• Electronics and IT-based enterprises.
• Mineral-based industries (such as ferro-alloys, cement, etc.)
• Facilitation and development of industrial infrastructure including power, communications, etc., under public private partnership
• Food processing industries.
• Engineering and allied industries (rolling mill, steel mill, etc.).

State Industrial Policy, 2008

• Aim: To facilitate and promote the growth of industry, employment and investment in the state.

Key initiatives:

• To create an investment-friendly environment in the state for industrial growth in the private, joint and cooperative sectors for sustainable economic development of Arunachal Pradesh.
• To generate employment opportunities in the state.
• To make Arunachal Pradesh a preferred destination for outside investors.
• To encourage local entrepreneurs to set up enterprises based on locally available raw-materials.
• To promote export-oriented industrial units.
• To take steps to promote the handloom and handicrafts industry.
• To promote local investors through joint ventures with outside investors.
• To encourage industrial units producing high value products.
• To ensure fast-track clearance of industrial proposals

Hydro Power Policy – 2008

Objectives:

• To harness hydropower potential of the state in a manner that is consistent with the provision of the Electricity Act, 2003 and the National Electricity Policy and other policies formulated in the Act.
• To develop hydropower projects in eco-friendly manner causing minimum distress to the affected people.
• To accelerate the pace of hydropower development through participation of both the central public sector undertakings and private power developers, as also by formulating public private partnership.
• To provide for creation of social and development infrastructure through hydropower development.
• To ensure proper rehabilitation and resettlement of people affected by projects in order to improve their living standards.
• To create job opportunities for local tribal people specially for those affected by the project

Small Hydro Power (SHP) Policy, 2007

Aim: To facilitate and promote the growth of small hydro power plants and, thereby, increase employment opportunities in the state.

Key initiatives:

• Private participation in development of SHPs with targeted incentives.
• Formulation and notification of an action plan for SHP generation. The action plan to provide programmes for capacity addition and determine the extent of involvement of various stakeholders of State Government or agencies in the field.

North East Industrial and Investment Promotion Policy (NEIIPP), 2007

Aim: To promote the Northeast region as an attractive investment region through concessions and incentives.

Key features:

• Industries covered under this policy are eligible for incentives for a period of 10 years from the date of commencement of commercial production.
• All new units as well as existing units that undergo substantial expansion (minimum 25 per cent increase in fixed capital) and start production before 2017 would qualify for incentives.
• Incentives would be available for all existing industrial units and upcoming units anywhere in the Northeast.
• A high-level monitoring committee or advisory committee would oversee the implementation of the NEIIPP.
• NEIIPP would not be applicable to peripheral activities such as preservation while in storage, cleaning, packing, re-packing, labelling or re-labelling, sorting, etc.
• North Eastern Development Finance Corporation Ltd (NeDFI) to act as the nodal agency for disbursal of subsidies.
• NEIIPP, 2007, has replaced the North East Industrial Policy, 1997

Agriculture Policy, 2001

Aim: To achieve higher economic growth and create job opportunities for the rural unemployed through agriculture and allied sectors.

Key initiatives:

• Top priority to be accorded on increasing farmers‟ income.
• Addressing problems related to shifting (jhum) cultivation.
• Location-specific strategy development – area specific and differentiated strategy.
• Convergence of allied activities by making a shift from a commodity approach to a system approach in agriculture.
• Technology transfer.
• Supply of inputs such as seed, fertiliser, pesticides, agri-tools and implements and credit to farmers at reasonable rates.
• Facilitating private investment in agriculture, especially for establishing agro-based industries.
• People‟s participation through formation of “self-help groups” and village committees at several levels.
• Research and technology package for location-specific agricultural research based on identified agro-climatic zone.
• Marketing infrastructure and techniques, especially for preservation, storage and transportation.
• Priority on setting up agro-processing units in key production areas.
• Market intervention scheme involving procurement by a notified agency to assure remunerative prices to farmers

Mineral-based industry

• Arunachal Pradesh has considerable mineral reserves, which offers immense potential.
• The state has reserves of coal at Bhalukpong; graphite at Tahila, Bopi and Khetabari; limestone at Hunli, Tidding, Menga and Pagin; marble at Hunli, Tezu, Pyuli and Dora; dolomite at Kaspi and Rupa; and lead and zinc at Shergaon.
• These minerals are useful in the gasified form or in cooking, fertiliser plants, refractory units and calcium carbide manufacturing units.
• The state‟s mining activities are managed by the Arunachal Pradesh Mineral Development and Trading Corporation Limited (APMDTCL ).
• Parsuram Cements, a subsidiary of APMDTCL, is one of the oldest resource-based companies, based out of Lohit.

Agriculture and forest-based industries

• Major agro- and forest-based industries in the state relate to tea, fruit, timber and plywood industries.
• Non-timber based industries include bamboo, cane and medicinal plants.
• The industry is characterised by many regional players; several units have been set up by Arunachal Pradesh Forest Corporation (APFC), a government organisation.
• APFC has taken up a project on capacity building for production of bamboo-based industrial intermediates at Poma village near Itanagar.
• The State Industrial Policy, 2008 of Arunachal Pradesh lists agriculture and non-timber forest produce-based industries as thrust sectors.

Textile

• Textile is a grass-roots industry in Arunachal Pradesh and provides employment to mainly, women. Most of the units are home-based and have small scale of operations.
• 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 repute owing to their quality.
• The carpet weaving industry is promoted through the Government Craft Centre.
• The state has unique and appealing handloom designs from each of its tribes. The products include skirt (gale), shirt (galuk), cotton shawl, side bag and curtain cloth.

Key nodal agencies in Arunachal Pradesh

Department of Industries

• The Department of Industries is the main executive and regulatory agency, functioning under the State Government. It oversees and monitors the over all industrial development activities in the state.
• The department is engaged in various activities such as:

• Registration of industries regulation and development of industries.
• Providing finance to small scale and other industries.
• Distribution of scarce and indigenous raw-materials to different industrial units.
• Other industrial development related activities.

Arunachal Pradesh Industrial Development and Financial Corporation Limited (APIDFC)

• APIDFC was incorporated under the Companies Act,1956, in August 1978, to promote and finance industries in Arunachal Pradesh.

Arunachal Pradesh Energy Development Agency (APEDA)

• APEDA is the state designated agency (SDA) for implementation and enforcement of the Energy Conservation Act, 2001, in coordination with the Bureau of Energy Efficiency (BEE), Ministry of Power, Government of India.
• APEDA is also the state nodal agency for projects connected with clean development mechanism (CDM)

Arunachal Pradesh Khadi and Village Industries Board (APKVIB)

• APKVIB was constituted by the Government of Arunachal Pradesh in 1989, with the mission to create employment opportunities in the non-farm sector in the rural areas, to promote saleable articles and support rural development to improve quality of life.
• The industries under its purview include khadi (silk, cotton, woollen), minerals, forest- and agro-based industries, polymer and chemical, engineering and non-conventional energy, textile industry and service sectors.

North Eastern Development Finance Corporation Limited (NeDFI)

• NeDFI was promoted by Industrial Development Bank of India (IDBI), Small Industries Development Bank of India (SIDBI), Industrial Finance Corporation of India (IFCI), Industrial Credit and Infrastructure Corporation of India (ICICI), Unit Trust of India (UTI), Life Insurance Corporation of India (LIC), General Insurance Corporation of India (GIC) and its subsidiaries and State Bank of India (SBI).
• Incorporated in August 1995, NeDFI has its headquarter in Guwahati, Assam.
• NeDFI provides facilities such as project and equipment finance, working capital finance, schemes for development of entrepreneurial skill and market development for products from the Northeast.

Power

• Arunachal Pradesh had a total installed power capacity of 201.9 MW, under the state and central sector. While 83.3 MW of installed capacity was under state sector, 118.6 MW was under central sector.
  • Hydro power is the major source of electricity generation in the state, contributing around 97.6 MW, followed by 67.4 MW of renewable energy resources and 36.9 MW of thermal power.
  • Arunachal Pradesh has been focusing on developing its huge hydro power potential. The state has set up the Department of Hydro Power Development to oversee, coordinate and monitor hydro power development.
  • The Government of Arunachal Pradesh has signed a memorandum of understanding (MoU) with central sector power generators and integrated power developers (IPD) for the development of 135 hydroelectric power plants, with an aggregate capacity of 25,722 MW