EASE OF

DOING BUSINESS

IN

NORTH EAST

June 2017

Price : Rs. 150/- (Excluding Postage)

© THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

Al rights reserved. No part of this publication may be translated or copied in any

form or by any means without the prior written permission of The Institute of

Company Secretaries of India.

Published by :

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

ICSI House, 22, Institutional Area, Lodi Road, New Delhi - 110 003

Phones : 41504444, 45341000, Fax : 24626727

Website : www.icsi.edu, E-mail : info@icsi.edu

ISBN : 978-93-82207-99-3

Laser typesetting at AArushi Graphics

Printed at : Chandu Press/June 2017

(i )

Preface

As established time and again that encouragement of business activities along

with its various rewards to mankind stimulates the holistic development of the

nation. Therefore, with a view to boost the entrepreneurship environment,

government is initiating various measures for ease of doing business in India. To

name few are, the enactment of Insolvency and Bankruptcy Code, easier

processes for incorporation, integration of processes through eBiz portal, one

person company, simpler tax laws and alike.

In al , North-Eastern States, which have been pioneering states in the industrial

development of the country during the British era with the establishment of first

tea plantation industry, first oil refinery, and first coal field, are also emerging with the opportunities for its populace to exercise their entrepreneurial spirits through

the initiatives available for ease of doing business in their demographic region.

With a view to encourage the Businesses and to enable the business environment

along with the smooth utilization of resources and skil s and promotion of ease in

compliances from beginning til end, state governments at north east are initiating

schemes such as Think Investment, Think Assam, Emerging North-East, and

alike. Under this context, the Institute has published the Book, “Ease of Doing

Business in North East” to apprise the entrepreneurs, businesses, professionals

and other stakeholders, about the opportunities and chal enges involved with

ease of doing business in North East.

I commend the dedicated efforts of Dr. Sapna Malhotra, Deputy Director, ICSI in

preparing the manuscript of this publication and Mr. Akinchan Budhodev Sinha,

Assistant Director, Directorate of Professional Development, Perspective Planning

& Studies, ICSI for finalizing the publication for printing

I am sure that this publication would pave the way for the budding entrepreneurs

and facilitate to maximize the government efforts for the equitable growth of all

states of North East region under the initiatives for ease of doing business in

North East.

New Delhi

CS (Dr.) Shyam Agarwal

9 June, 2017

President

The Institute of Company Secretaries of India

(i i)

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CONTENTS

CHAPTERS

TITLE OF CHAPTERS

PAGE

I

INTRODUCTION

1

I

EASE OF DOING BUSINESS- MAJOR MILESTONES

31

II

INDUSTRIAL DEVELOPMENT IN NORTH EASTERN

37

REGIONS

IV

BUSINESS REFORMS ACTION PLAN & STATE POLICIES

52

AND MEASURUES

V

EFFECTIVE IMPLEMENTATION OF THE STATE POLICIES

65

IN NORTH EASTERN REGION

VI

IMPACT OF GST ON EASE OF DOING BUSINESS IN

74

NORTH EASTERN REGION

(v)

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CHAPTER I

INTRODUCTION

Overview of the North Eastern Region

The economy of Northeast India has got its definite identity due to its peculiar

physical, economic and socio-cultural characteristics. This region consists of

eight states viz., Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram,

Nagaland, Tripura, Sikkim. The NER of India covers an area of 2.62 lakh sq. km.

Occupying 8% of India’s geographical spread, the states are home to only 4% of

the country’s population, while Assam accounts for 68% of the population. Al the

eight states have different developmental prospects and resources to support

their efforts in contributing to the regional as well as national economy. A critical

appraisal of the key economic indicators along with a detailed sketch of the

individual strengths of the seven states is critical to achieve a holistic framework

to target growth in the region.

India’s north east region (NER) is endowed with huge untapped natural

resources and is acknowledged as the eastern gateway for the country’s ‘Look

East Policy’.

Arunachal Pradesh lies to its north and Sikkim a little away in the North West

bordering China and Bhutan. Bangladesh and Myanmar lie to its southwest and

east. The torrential Brahmaputra deposits its rich alluvial silt along the banks of

the plains of Assam. Tropical rain forest, rich in flora and fauna, spread their arms

across Arunachal Pradesh into Assam. It is a land where tea is an industry,

handicrafts a major occupation and martial arts a favoured sport.

The western side of the North East is connected to the eastern part of the Indian

subcontinent by a narrow land corridor, sometimes referred to as the Siliguri

Neck or “Chicken’s Neck”. The eight states that comprise the region reflect

ecological and cultural contrasts between the hil s and the plains; there are also

significant elements of continuity. Available medieval and modern records indicate

interdependence and interaction between the hil s and plains. The North East is

one of the most biodiverse regions in the world. The forest cover varies but

1

2

EASE OF DOING BUSINESS IN NORTH EAST

average 65 per cent is government owned. Vil age communities, individuals and

chiefs own the rest. The area can be divided into three geographical divisions-

the Shil ong Plateau, the North Eastern hil Basin and the Brahmaputra Val ey.

Economic Profile of North Eastern Regions

• Higher contribution of the agriculture sector to the GSDP than the country

average. Primary sector activities mainly constitute cultivation, on which

approximately 75 per cent of the region’s population depends for

employment; agriculture contributes to approximately 30 per cent of the

NSDP.

• Secondary sector activity comprises infrastructure, construction and

mining; contributes to approximately 18 per cent of the NSDP.

• Industrial products primarily include crude petroleum, natural gas, tea,

minerals and steel fabrication.

• Tertiary sector constitutes tourism-related activities, real estate businesses

and public administration; contributing approximately 52 per cent of the

NSDP.

Exhibit 1

Economic Profile of NER

Source: Individual state official websites, downloaded on July 2007.

Arunachal Pradesh

Arunachal Pradesh is the largest among the seven states located in the Northeast

of India, with an area of 83,743 sq km. It shares its borders with the neighbouring

EASE OF DOING BUSINESS IN NORTH EAST

3

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. The geographic location of the state provides immense opportunities for

international trade with South Asian countries such as Myanmar, Bhutan and China.

The land is mostly mountainous with the Himalayan ranges running north-south.

The state is divided into five river valleys - the Kameng, the Subansiri, the Siang,

the Lohit and the Tirap. These river val eys have immense hydropower potential,

currently estimated at 60,000 MW, or approximately 22 per cent of India’s current

power generating capacity. As of June 2016, the installed hydropower capacity in

Arunachal Pradesh is 97.57 megawatt (MW).

The state’s economy is largely agrarian, based on the terraced farming of rice

and the cultivation of crops such as maize, millet, wheat, pulses, sugarcane,

ginger, oilseeds, cereals, potato, and pineapple. In 2015-16, total production of

horticulture crops in the state was recorded at 481.76 thousand metric tonnes,

while the total production of fruits and production of vegetables in the state

stood at around 9,964.03 thousand metric tonnes and 5,124.26 thousand metric

tonnes in 2015-16, respectively. Some of the other key industries of the state

include art and crafts, weaving, cane and bamboo, horticulture, power and

mineral based industry. At current prices, Arunachal Pradesh’s gross state

domestic product (GSDP) was about US$ 2.98 bil ion in 2015-16. Average annual

gross state domestic product (GSDP) growth rate from 2004-05 to 2015-16 was

about 12.98 per cent.

Due to its topography, the state has varied agro-climatic conditions suitable for

horticulture of flowers and aromatic and medicinal plants. Arunachal Pradesh

is home to 601 species of orchids, or 52 per cent of the species of orchids

known in India, indicating a huge potential for attracting tourists, especial y

foreign ones.

The state and central governments have both offered huge fiscal and policy

incentives for the development of thrust sectors in the state. Some of these policies

include Public Private Partnership Policy 2011, the State Industrial Policy 2008 and

the Hydro Power Policy 2008. In October 2014, the Union Railway Ministry

approved the proposal to connect New Delhi with Naharlagun, 15 km away from

Itanagar, with a bi-weekly Rajdhani Express. The project is expected to be

operational by April 2018.

According to the Department of Industrial Policy & Promotion (DIPP), FDI inflows to

the Northeast states total ed to US$ 94 mil ion from April 2000 to March 2016

4

EASE OF DOING BUSINESS IN NORTH EAST

Key Sectors:

• Power: As of June 2016, the state accounted for an instal ed capacity of

power generation of 55.41 MW from thermal power plants out of which

43.06 MW is contributed by gas power plants and 12.35 MW from coal

power plants.For the instal ation of 40,000 MWpgrid connected solar

rooftop system in the country by 2022, the target allocated for the state is

50 MWp.

• Agriculture and Forest-Based Industries: Under Rashtriya Krishi Vikas

Yojana, US$4.82 mil ion was allocated to the state during 2015-16, out of

which US$2.41 mil ion has been released and US$ 2.12 mil ion has been

utilized by the state.

• Tourism : In 2015-16, foreign tourist arrivals in the state stood at 5,700

tourists.Under the SwadeshDarshan scheme, for the development of

adventure tourism in the state, US$14.83 mil ion was sanctioned by the

state government, during 2015-16.

• Textiles : Out of the total cost of US$ 4.50 mil ion under Intensive Bovoltine

Sericulture Development Project, til June 2016, US$ 840.20 thousand has

been released by Government of India for the state of Arunachal Pradesh.

Factfile

• Capital: Itanagar

• Geographical Area (sq km): 83,743

• State Language: Assamese, Bengali, Hindi and English

• Literacy Rate: 65.38 per cent

• Key Industries: Arts and Crafts, weaving, cane and bamboo, carpet

weaving, wood carving, ornaments, tourism and horticulture

EASE OF DOING BUSINESS IN NORTH EAST

5

Exhibit 2

Net State Domestic Product (NSDP) of Arunachal Pradesh

Arunachal Pradesh’s NSDP was US$ 2.07 bil ion over 2014-15.

US $ Bil ion

2014-15

2.07

2013-14

2.07

2012-13

2.02

2011-12

2.06

2010-11

1.83

2009-10

1.44

2008-09

1.13

2007-08

1.09

2006-07

0.83

2005-06

0.78

2004-05

0.71

0.0

0.5

1.0

1.5

2.0

2.5

Source: Directorate of Economics & Statistics of Arunachal Pradesh, Central Statistics Office 1.2.2 Assam

Assam is located in the northeast of India. The state shares its borders with

Arunachal Pradesh, Nagaland, Manipur, Mizoram, Meghalaya, Tripura and West

Bengal. The state shares international borders with Bangladesh and the Kingdom

of Bhutan. Assam is India’s gateway to Northeast India and acts as a vital link for

trade with Southeast Asian countries. The state is known for its tea, petroleum

resources, muga silk and bio-diversity. It is also becoming an increasingly popular

destination for wildlife tourism.

At current prices, the Gross State Domestic Product (GSDP) of Assam was US$

30.72 bil ion in 2015-16 while the average annual GSDP growth rate from 2004-

05 to 2015-16 was 9 per cent.The 12th Five Year Plan estimates the growth rate to

be around ten per cent overal , while estimating industry and services sub-

sectors to grow at 9 per cent and 13 per cent respectively.

The state is rich in water resources and has vast tracts of fertile land. Assam is

also the third-largest producer of petroleum and natural gas in the country and

has ample reserves of limestone. With its five national parks and 18 wildlife

sanctuaries, the state is a biodiversity hotspot. Other potential areas of investment

include power and energy, mineral-based industries, tourism and crude oil

refining.

6

EASE OF DOING BUSINESS IN NORTH EAST

Assam has adopted numerous investor-friendly policies to attract investments

and accelerate industrial development. Key areas of focus include the IT, tourism

and power sector along with several other initiatives such as the North East

Industrial and Investment Promotion Policy (NEI PP) 2007 and the Industrial and

Investment Policy 2014. Assam stands 22nd among Indian states in rankings

based on ease of doing business and reforms implementation, according to a

study by the World Bank and KPMG.

According to the Department of Industrial Policy & Promotion (DIPP), cumulative

FDI inflows during April 2000 to March 2016 total ed to US$ 94 mil ion.

Development Plans:

• The Government of India signed the agreement for third and last tranche

of US$ 273 mil ion loan, out of total US$ 800 mil ion loan agreement with

The Asian Development Bank (ADB), for constructing 6,000 kms of all-

weather rural roads in Assam, Chhattisgarh, Madhya Pradesh, Odisha

and West Bengal

• The first passenger train was flagged off from Silchar to Guwahati that wil

ply on the newly converted Silchar-Lumding section in Assam

Key Sectors:

• Tea: During 2015-16, the state government provided Assam State Electricity

Board (ASEB) with US$ 1.52 mil ion for the electrification of quarters of the

Tea Workers. The state government has proposed to construct a Tea

Museum in Dibrugarh, in 2016-17.

• Energy-Coal, Oil, and Gas: The Assam-Arakan Basin in Northeast India is

an important oil-producing region and contains more than 15 per cent of

the country’s reserves. Assam has over 1.3 bil ion tonnes of crude oil and

156 bil ion cubic metric tonnes of natural gas reserves.

• Medical Herbs and Plants: Assam, with its vast area under hil s and forests,

is home to a variety of medicinal herbs and plants. About 300 types of

medicinal herbs and plants are found in abundance in the state with the

Brahmaputra val ey alone having 150 varieties of herbs and plants of

commercial value.

• Sericulture: Assam enjoys global monopoly in terms of Muga silk (also

known as golden silk) production. The state accounts for around 95 per

cent of global Muga production. Moreover, Assam is the country’s major

Eri silk producer (accounts for 65 per cent of the country’s Eri silk production).

Raw silk production in the state during 2015-16 was recorded to be 3,325

EASE OF DOING BUSINESS IN NORTH EAST

7

MT whereas during 2016-17 (up to May 2016), the raw silk production was

1,137 MT.

Factfile

• Capital: Dispur

• Geographical Area (sq km): 78,438

• State Language: Assamese, Bodo, Bengali and English

• Literacy Rate: 73.18 per cent

• Key Industries: Tea, coal, oil and gas, Limestone and Cement, agriculture,

horticulture, food processing and tourism

Exhibit 3

NSDP of Assam

Assam’s Net State Domestic Product (NSDP) was US$ 26.5 bil ion over 2014-15

US $ Billion

2014-15

26.5

2013-14

24.3

2012-13

23.2

2011-12

23.9

2010-11

22.1

2009-10

18.0

2008-09

15.5

2007-08

15.5

2006-07

12.6

2005-06

11.9

2004-05

10.5

0

5

10

15

20

25

30

Source: Directorate of Economics & Statistics of Assam, Central Statistics Office Manipur

Manipur is situated in the eastern-most corner of Northeast India. The state

shares borders with other north-eastern states of Nagaland, Mizoram and Assam

and the neighbouring country of Myanmar. Due to its wealth of flora and fauna,

Manipur is described as a ‘flower on lofty heights’, ‘a jewel of India’ and

‘Switzerland of the East’. Its breath-taking scenic beauty makes it a tourist’s

paradise.

8

EASE OF DOING BUSINESS IN NORTH EAST

Manipur has the advantage of acting as India’s ‘Gateway to the East’ through

Moreh town, which is the only feasible land route for trade between India and

Myanmar and other Southeast Asian countries. With about 3,268 square km of

area covered by bamboo forests, Manipur is one of India’s largest bamboo

producing states and a major contributor to the country’s bamboo industry. In

2015, the state accounted for 9,303 square km of bamboo bearing area.

Manipur has the highest number of handicrafts units as well as the highest

number of craft persons comprising skil ed and semi-skil ed artisans in the entire

north-eastern region. Handlooms is the largest cottage industry in Manipur and

the state ranks among the top five in terms of the number of looms in the country.

The Gross State Domestic Product (GSDP) of the state grew at a compound annual

growth rate (CAGR) of 8.17 per cent from 2004-05 to 2015-16. At current prices,

the total GSDP of Manipur was about US$ 2.7 bil ion in 2015-16.

As of June 2016, Manipur had a total instal ed power generation capacity of

206.11 MW. The state has a potential to generate hydropower equivalent to about

2,200 MW.

Imphal has one airport and Air India provides air cargo services. Four national

highways run through the state. The railway line under construction on the

Manipur-Assam border is a national priority project. Manipur has a land area of

22,327 sq km and a pol ution free environment.

Key Sectors:

• For a period of 2007 to 2017, 72 projects have been sanctioned under

Technology Upgradation/Establishment/Modernization of Food Processing

Industries Scheme, 37 projects under National Mission for Food Processing

Scheme and 1 project, each, under the Food Testing Laboratory Scheme

and Integrated Cold Chain, Value Addition & preservation Infrastructure

Scheme.

• Total financial assistance given to handloom weavers in the state during

2015-16 stood at US$ 0.45 mil ion.

• In 2015-16, US$ 0.10 mil ion was released for the development and

promotion handicrafts sector under various handicraft schemes in the

state.

• Government of Manipur has proposed to provide a training programme

for bamboo-based industries in the trades of bamboo blinds, furniture

making, bamboo charcoal and briquette making etc.

EASE OF DOING BUSINESS IN NORTH EAST

9

• Manipur is the first state in India to have set up the 4-core infrastructure of

the National e-Governance Plan, namely Common Service Centre, State

Wide Area Network, State Data Centre and State Portal, State Service

Delivery Gateway and e-forms.

• The government sees hydropower as a major industry and has given top-

priority consideration to developing the state’s hydropower potential. In

view of this goal, it has decided to invite private investors in the hydropower

generation industry.

Exhibit 4

NSDP of Manipur

Manipur’s net state domestic product (NSDP) was US$ 2.06 bil ion over 2014-15.

US $ Billion

2014-15

2.06

2013-14

2.08

2012-13

1.93

2011-12

1.97

2010-11

1.76

2009-10

1.55

2008-09

1.43

2007-08

1.50

2006-07

1.22

2005-06

1.16

2004-05

1.03

0.00

0.50

1.00

1.50

2.00

2.50

Source: TechSci Estimates based on “Advanced Estimates” provided by Directorate of Economics & Statistics of Manipur

Meghalaya

Meghalaya is located in the Northeast of India. The state shares its border on the

north and east with Assam and on the south and west with

Bangladesh.Meghalaya’s GSDP stood at US$ 4.17 bil ion in 2015-16. The state’s

GSDP grew at a CAGR of 9.74 per cent between 2004-05 and 2015-16.

Meghalaya, with an average annual rainfal of 1,150 cm, receives the highest

amount of rainfal in the country. The diverse range of soil types, including red-

loamy and laterite, support various agricultural crops like rice, maize, pulses,

oilseeds, cotton, jute and mesta. Meghalaya has a strong floriculture sector and

10

EASE OF DOING BUSINESS IN NORTH EAST

is one of the leading states in the Northeast in terms of production and supply of

cut flowers to mainland consumer markets. About 14 per cent (3,108 square

kilometres) of Meghalaya is covered by bamboo forests, and the state is one of

the leading bamboo producers in the country. The state has achieved success in

the cultivation of non-traditional crops like tea, cashew nut, oilseeds, tomato,

mushroom, wheat, etc. During 2015-16, the state produced 409.25 thousand

tonnes of fruits under an area of 37.14 thousand hectares. Similarly, 88.20 thousand

tonnes of spices were produced in the state under an area of 18.20 thousand

hectares during 2015-16.Of the 6,000 medicinal plants in India, 834 plants,

including the famous Himalayan Yew, are in Meghalaya. Moreover, the state has

eight of the top 20 medicinal plants that are traded in the country and are in high

demand.

Out of the total installed power generation capacity, 356.58 MW was contributed

by hydropower, 122.84 MW by thermal power, and 31.03 MW by renewable

power. The potential for hydropower in the state is estimated to be around 3,000

MW.

Meghalaya, with abundant deposits of coal, limestone, kaolin feldspar, quartz,

granite, industrial clay and uranium and a small deposit base of sil imanite,

bauxite, base metals and apatite has great industrial potential.

Meghalaya, one of the most picturesque states in the country, has two National

Parks and three wildlife sanctuaries. It offers many adventure tourism opportunities

like mountaineering, rock climbing, hiking & trekking, water sports, etc.

Agro-processing, horticulture, minerals, tourism, electronics and IT have been

identified as thrust sectors for development and promotion. The state provides

excel ent institutional support through various central and state government

agencies, namely North East Council, Ministry of Development of North Eastern

Region, and Meghalaya Industrial Development Corporation.

According to the DIPP, cumulative FDI inflows to the North-eastern states, during

April 2000 to March 2016, stood at US$ 94 mil ion.

Key Sectors:

• Meghalaya is one of the leading north-eastern states in terms of

production and supply of cut flowers to mainland consumer markets. The

state’s climate, particularly the areas near Shil ong in East Khasi hil s district,

is well suited for cut flower production.

• Meghalaya is one of the leading producers of bamboo in the country.

Bamboo enterprises can be developed from the bamboo reserves and

EASE OF DOING BUSINESS IN NORTH EAST

11

forest cultivations. Natural bamboo forests cover 3,108 square kilometers

(14 per cent) of Meghalaya’s total geographical area.

• Meghalaya has a climate that supports agricultural and horticultural

activities. The state offers potential for investment in these areas.

• As of June 2016, the state had an instal ed hydroelectric power capacity of

356.58 MW. The state utilities accounted for a share of 79 per cent in total

installed capacity and the remaining is contributed by the central

sector.Hydroelectric power projects with a total capacity of 687 MW have

been proposed to be set up in Meghalaya. Al these projects are expected

to be operational by 2016-17.

• Meghalaya is richly endowed with flora, fauna, thick forests, ancient forest

groves, large rivers and grass fields – making it an attractive tourism

destination.

• Meghalaya has an established tradition of high-quality weaving. Around

15,900 families are involved in handloom activities in the state. There are

eight handloom production centres, 24 handloom demonstration-cum-

production centres, 24 weaving training centres and a state-level

handloom training institute (Mendipathar, East Garo Hil s) in the state.

Exhibit 5

Economic Snapshot: NSDP of Meghalaya

Meghalaya’s net state domestic product (NSDP) was US$ 3.74 bil ion over 2014-15.

US $ Billion

2014-15

3.74

2013-14

3.07

2012-13

2.96

2011-12

3.15

2010-11

2.82

2009-10

2.35

2008-09

2.24

2007-08

2.14

2006-07

1.71

2005-06

1.46

2004-05

1.30

0

1

2

3

4

Source: Directorate of Economics & Statistics of Meghalaya, Central Statistics Office

12

EASE OF DOING BUSINESS IN NORTH EAST

Mizoram

Mizoram is one of the seven states in the North-East of India. Mizoram shares its

borders with other north-eastern states of Manipur, Tripura and Assam, and

neighbouring countries of Bangladesh and Myanmar. Industries in the state enjoy

a unique location-specific advantage. Bordering Myanmar and Bangladesh,

Mizoram offers a gateway for engaging in international trade with Southeast

Asian countries. With improving road, rail and air connectivity and the

establishment of trade routes with neighbouring countries, trade facilitation has

improved over the last decade.

With 31 per cent (6,446 sq km) of its geographical area covered by bamboo

forests, the state is one of the leading producers of bamboo in India, contributing

14 per cent to the country’s bamboo stock. It offers immense potential for

commercial exploitation of the natural resources for export-oriented industries.

The climatic conditions in the state provide a conducive breeding ground for

commercial exploitation of all kinds of silkworms. Sericulture remains one of the

state’s key industries. During 2015-16, a total of 5,054 farmers from 176 vil ages

were engaged in sericulture across land area of 5,293 hectares.

Mizoram has abundant hydro-electric power potential (around 4,500 MW) with

just 0.7 per cent harnessed through small and mini-hydel projects to date. As of

June 2016, Mizoram had a total instal ed power generation capacity of 119.52

MW (comprising 36.47 MW from state utilities and 82.95 MW from central utilities).

Renewable power and thermal power contributed 36.57 MW and 48.64 MW

respectively.

With a literacy rate of 91.85 per cent, Mizoram offers a highly literate workforce.

Knowledge of English is an added advantage for the Mizo workforce. Mizoram

government has formulated a new economic development programme cal ed

‘the Way Forward’ under which the agriculture and al ied services would not be

dependent on marginal farmers, scientific farming would be introduced and

agri-business would be encouraged by bringing in the educated youth in the

agricultural sector.

Key Sectors:

• The natural resources, climatic conditions and policy incentives in the

state support investments in bamboo, sericulture, tourism, agro-products

and agro-processing sectors.

• With abundant natural resources and supporting policies, the food

processing sector offers potential for investment. Mizoram accounts for

about 12 per cent of the total fruits produced in Northeast India, and the

EASE OF DOING BUSINESS IN NORTH EAST

13

yield per hectare is on the rise because of adoption of modern horticultural

practices

• With its highly green hil s, crisscrossing rivers, and interspersed lakes,

Mizoram is a tourist’s paradise. Under the 12th Five-Year Plan, Mizoram

has 11 ongoing tourism projects with a sanction of US$ 7.7 mil ion from the

Government of India.

Exhibit 6

Economic Snapshot: NSDP of Mizoram

Mizoram’s net state domestic product (NSDP) was US$ 1.6 bil ion over 2014-15.

US $ Billion

2014-15

1.6

2013-14

1.5

2012-13

1.3

2011-12

1.4

2010-11

1.3

2009-10

1.0

2008-09

0.9

2007-08

0.9

2006-07

0.7

2005-06

0.6

2004-05

0.5

0

0.5

1

1.5

2

Source: TechSci Estimates based on “Advanced Estimates” provided by Directorate of Economics & Statistics of Mizoram

Nagaland

Nagaland is among the seven North-Eastern states and is located in India’s

farthest east side. The state is flanked by Myanmar in the east, Arunachal Pradesh

in the north, Assam in the west and Manipur in the south.The state has

considerable resources of natural minerals, petroleum and hydropower. It has

unexploited reserves of around 600 mil ion metric tonnes (MT) of crude oil and

more than 20 MT of hydrocarbon. Moreover, the state has 315 MT of coal reserves

and 1,038 MT of limestone reserves. Nagaland’s estimated hydropower

generation potential is 1,574 megawatt (MW), while the state has a total instal ed

power generation capacity of 140 MW.

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EASE OF DOING BUSINESS IN NORTH EAST

The agro-climatic conditions in Nagaland provide commercial opportunities for

floriculture and horticulture. The state has 650 indigenous species of medicinal

and aromatic plants. The state is estimated to have the potential to produce

15,000 MT of honey and 100 MT of wax, which together could generate around

US$ 100 mil ion annually. Moreover, the production of honey during 2015-16 was

recorded to be 0.43 thousand tonnes.

Bamboo is found extensively in Nagaland, with bamboo growing stock covering

nearly five per cent of the total stock in the country. During 2015-16, production of

raw silk in the state of Nagaland stood at around 631 MT. Moreover, from April-

August, 2016, the raw silk production in the state was 218 MT. The state aims to

increase its silk production to 1,700 MT, over the 12th Five-Year Plan period.

The gross state domestic product (GSDP) of Nagaland was about US$ 3.47 bil ion

in 2015-16, increasing at a compound annual growth rate (CAGR) of around 9.33

per cent between 2004-05 and 2015-16. Agriculture and allied sector contribution

to the economic output stood at 20 per cent and expected to reach 28 per cent by

2025. About 71 per cent of the state’s population is engaged in farming.

The state provides institutional support through various central and state

government agencies viz., North East Council, Ministry of Development of North

Eastern Region and Nagaland Industrial Development Council.

The state offers excellent policy and fiscal incentives for agro-based and forest-

based industries, horticulture, food processing, mining, tourism, and the

handlooms and handicrafts sectors. Industrial centres and special economic

zones (SEZs) are being developed to enhance the marketability of products.

Key Sectors:

• Nagaland promotes bamboo processing as an enterprise, covering various

applications such as food-based, medicinal usage, handicraft, art, tiles

and flooring. Nagaland Bamboo Development Agency (NBDA) is the nodal

office that coordinates with other offices for all bamboo-related research,

development and business applications. In July 2015, the Governor of

Nagaland inaugurated the country’s first bamboo toilet in Nagaland.

• Nagaland has a rich wealth of flora and fauna. Favourable climatic and

geographical conditions in the state offer tremendous scope for floriculture.

• Nagaland has a suitable climate for agricultural and horticultural produce.

It supports multiple crops viz., rice, maize, mil et, gram, mustard, bean,

sugarcane, rubber, tea, banana, pineapple, orange, jackfruit, pear, plum,

passion fruit, litchi, mango, lemon, sweet lime, potato, sweet potato,

tapioca, tomato, pea, chil y, ginger, garlic, cardamom, etc.

EASE OF DOING BUSINESS IN NORTH EAST

15

• Nagaland has a potential for 1,574 MW of hydropower generation, while

the instal ed hydropower generation capacity in the state, as of June 2016,

was 53.32 MW.

• The handicraft and handloom sector in Nagaland has enormous growth

potential due to the abundant availability of skil ed labour and raw

materials, coupled with rich cultural traditions that people fol ow. Handicraft

and handloom products from the state are renowned for their beauty and

intricate design.

Exhibit 7

Economic Snapshot: NSDP of Nagaland

Nagaland’s net state domestic product (NSDP) was US$ 3.06 bil ion over 2014-15.

US $ Billion

2014-15

3.06

2013-14

2.71

2012-13

2.66

2011-12

2.66

2010-11

2.38

2009-10

2.05

2008-09

1.90

2007-08

1.86

2006-07

1.49

2005-06

1.39

2004-05

1.21

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Source: Directorate of Economics & Statistics of Nagaland, Central Statistics Office Sikkim

Sikkim is surrounded by vast stretches of Tibetan Plateaus in the north, the Chumbi

Val ey of Tibet and the Kingdom of Bhutan in the east, the Kingdom of Nepal in the

west and Darjeeling district of West Bengal in the south.

The state is richly endowed with rare and exotic flora and fauna, which includes

4,500 different flowering plants, 550 types of orchids, 36 varieties of rhodendrons,

28 bamboo species, over 144 mammals, 552 species of birds and 600 different

butterflies. This makes it one of the leading states in the Northeast region in terms

of production and supply of cut flowers to mainland consumer markets.

16

EASE OF DOING BUSINESS IN NORTH EAST

Sikkim has several snow-capped peaks including Kanchenjunga, the world’s

third highest peak that attracts a large number of tourists from across the globe.

The state has been able to bag seven out of 25 central government’s national

projects to promote India as destination for adventure tourism globally.

The gross state domestic product (GSDP) of Sikkim expanded at a high compound

annual growth rate (CAGR) of 19.44 per cent between 2004-05 and 2015-16.

There has been a drastic shift in the sectoral contribution from primary and tertiary

to the secondary sector. In 2015-16, the secondary sector contributed 67.73 per

cent to the state’s GSDP at current prices. It was fol owed by the tertiary sector at

23.65 per cent and primary sector at 8.62 per cent. Moreover, at a CAGR of 33.91

per cent, the secondary sector has been the fastest growing among the three

sectors from 2004-05 to 2015-16. It was driven by manufacturing, construction

and electricity, gas & water supply.

Sikkim had a total instal ed power generation capacity of 414.48 megawatt as of

June 2016.Sikkim has a suitable climate for agricultural and horticultural products.

It supports multiple crops; viz., rice, wheat, maize, mil et, barley, urad, pea, soya

bean, mustard and large cardamom. Sikkim is the top producer of large

cardamom, contributing over 80 per cent to India’s total production. As per the

state budget 2016-17, Sikkim got certified as first ful y organic state in India by the

Central Ministry of Agriculture and Farmers’ Welfare as well as other recognized

agencies of the country.

The state fol ows the North East Industrial Investment Promotion Policy, 2007,

which provides several incentives and concessions for investment. Institutional

support is provided through various central and state government agencies viz.,

North East Council, Ministry of Development of North Eastern Region and

Commerce and Industries Department.

The state has attracted Foreign Direct Investment (FDI) equity inflows worth US$

3.93 bil ion during the period April 2000 to March 2016, according to data released

by Department of Industrial Policy and Promotion (DIPP).

Key Sectors:

• The allocated budget for the industry and minerals sector in Sikkim is

estimated to be US$ 9.46 mil ion during 2016-17. Out of this total al ocation,

vil ages and smal industries would be allocated US$ 5.97 mil ion and

large industries would be allocated US$ 2.75 mil ion. The remaining US$

0.73 mil ion would be al ocated to the non-ferrous mining and metal urgical

industries of the state.

EASE OF DOING BUSINESS IN NORTH EAST

17

• Sikkim’s geographical and environmental conditions are quite conducive

for development of floriculture at a higher altitude. The state is also

considered to be the Kingdom of flowers and is an innovator in cultivating

Gladiolus.

• The state government is also laying emphasis on improving organic

farming in the state. During 2015-16, the state government recognised the

existing MPCS in the state to promote and enhance organic farming in

Sikkim. As a result of these initiatives, the state was certified as the first

ful y organic state in India, by the Central Ministry of Agriculture and

Farmers’ Welfare as wel as other recognized agencies of the country.

• It is estimated that Sikkim has a peak potential capacity of 8,000 MW and

a steady 3,000 MW of hydroelectric power. About 28 hydropower projects

are being set up in the state under the public-private partnership (PPP)

mode.

• Tourism in Sikkim has emerged as the new profession of the Sikkimese

people with its vast natural potential. Promotion of vil age tourism,

homestay, cultural tourism, trekking tourism, ecotourism, wel ness tourism,

flori–tourism and adventure tourism has given fil ip to the tourism trade in

the state where a large of number of people are engaged under different

employment opportunities.

Exhibit 8

Economic Snapshot: NSDP of Sikkim

Sikkim’s net state domestic product (NSDP) was at US$ 1.7 bil ion over 2014-15.

US $ Billion

2014-15

1.7

2013-14

1.9

2012-13

1.6

2011-12

1.6

2010-11

1.5

2009-10

1.2

2008-09

0.6

2007-08

0.5

2006-07

0.4

2005-06

0.4

2004-05

0.3

0

0.5

1.0

1.5

2.0

Source: TechSci Estimates based on “Advanced Estimates” provided by Directorate of Economics & Statistics of Sikkim

18

EASE OF DOING BUSINESS IN NORTH EAST

Tripura

Tripura, one of the north-eastern states, is bounded on the north, west, south and

southeast by Bangladesh, whereas in the east, it shares a common boundary

with Assam and Mizoram.

The state has favourable climatic conditions for cultivation of various fruit and

horticultural crops. It is rich in natural resources such as natural gas, rubber, tea

and medicinal plants. Tripura is endowed with rich and diverse bamboo

resources. It is also the second largest natural rubber producer in the country

after Kerala and produced 37,277 mil ion tonnes of rubber in FY 2015. Tripura

accounts for about 6 per cent of bamboo sticks, used for making incense sticks in

India. Around 21 of the 130 bamboo species known in India are grown in the

state. Tripura holds a strong tea plantation base, with 58 tea gardens covering an

area of over 6,400 hectares as of 2014-15. Tea produced in Tripura is famous for

its blending qualities. The state is also rich in natural gas deposits, glass sands,

limestone, plastic clay and hard rock. As of June 2016, Tripura had a total instal ed

power generation capacity of 676.5 megawatt (MW).

With its pleasant climate and scenic landscape, Tripura is a favoured tourist

destination. The state offers tourists attractions such as historical Hindu and

Buddhist sites, temples, rivers and rock carvings. The number of foreign tourists

visiting the state grew at a compound annual growth rate (CAGR) of 50.4 per cent

from 2010-11 to 2014-15. The state has favourable climatic conditions for cultivating

various fruit and horticultural crops including rice, jackfruit, pineapple, potato,

sugarcane, chil i and natural rubber. Rice is the major crop of the state and is

cultivated in 91 per cent of the cropped area. The state has a wide variety of

medical plants having 266 medicinal plants, 379 species of trees, 581 herbs, 320

shrubs and 165 climbers.

The Guwahati-region which includes Assam, Arunachal Pradesh, Manipur,

Meghalaya, Mizoram, Nagaland and Tripura has attracted Foreign Direct

Investment (FDI) equity inflows worth US$ 94 mil ion during the period April 2000

to March 2016, according to data released by Department of Industrial Policy and

Promotion (DIPP).

The state has a wide range of fiscal and policy incentives for businesses under

the Tripura Industrial Investment Promotion Incentive Scheme, 2012. Developing

infrastructure, improved rail & air connectivity, and establishment of trade routes

have facilitated trade.

Recent developments

The Asian Development Bank (ADB) and Government of India signed a loan

EASE OF DOING BUSINESS IN NORTH EAST

19

agreement of US$ 80 mil ion, which is the third tranche of a US$ 200 mil ion

financing facility under the North Eastern Region Capital cities Development

Investment Program, and wil be invested for improving water supply, solid waste

management and sanitation in the cities of Agartala and Aizwal, the capital cities

of Tripura and Mizoram respectively.

The Airports Authority of India (AAI) plans to spend Rs 450 crore (US$ 68 mil ion)

on upgradation of Agartala airport in Tripura to international standards, which wil

be completed by 2016.

Key Sectors:

• Tripura has vast natural gas reserves. The gas is available in a non-

associate form, with high methane content of about 97.0 per cent.

Concessional gas-pricing and vast reserves offer potential for setting up

industries in the sector.

• The agro-climatic conditions in the state are favourable for growing various

fruits and horticultural crops. Tripura’s pineapples and oranges are known

for their unique flavour and organic nature.

• An agri-export zone for pineapples is also being developed. The state

also has potential in the meat processing sector. Tripura implemented the

National Food Security Act, 2013, in September 2015 and became the first

state to implement the act in the entire North East

• Tea grown in Tripura is known for its good blending qualities. Organic tea

and green tea production have been undertaken by some of the tea estates

in the state. Tea production is a growing industry in Tripura and provides a

considerable scope for investment.

• During 2015-16, 13 online services were inaugurated in the state under e-

District project. Further, an incubation centre is also being set up for

encouraging the IT entrepreneurship in the state.

20

EASE OF DOING BUSINESS IN NORTH EAST

Exhibit 9

Economic Snapshot: NSDP of Tripura

Tripura’s net state domestic product (NSDP) was estimated at US$ 3.83 bil ion

over 2014-15.

US $ Billion

2014-15

3.83

2013-14

4.31

2012-13

4.13

2011-12

4.20

2010-11

3.

3 6

. 5

63

2009-10

2.99

2008-09

2.71

2007-08

2.68

2006-07

2.21

2005-06

2.05

2004-05

1.82

0

1

2

3

4

5

Source: TechSci Estimates based on “Advanced Estimates” provided by Directorate of Economics & Statistics of Tripura

Socio-Economic profile

• The NER has a high literacy rate of 68 per cent, which is higher than the

national average of 65.4 per cent.

• Mizoram has the second-highest literacy rate in the country at 88 per

cent.

• Education infrastructure has improved considerably over the past decade

and, so have the associated metrics of teacher-student ratio, enrol ment

rates and, the number of schools and col eges.

• More than 50 per cent of all the state’s population is employed by the

primary sector.

• Handloom industry provides employment to a large section of the

population.

EASE OF DOING BUSINESS IN NORTH EAST

21

Exhibit 10

Literacy Rates and Sector-wise Distribution of Workers

Exhibit 11

Socio Economic Snapshot

22

EASE OF DOING BUSINESS IN NORTH EAST

Exhibit 12

Region wise Development of Industries- A Snapshot

State

Characteristics

Assam

• Largest producer of tea in India and, other agricultural

produce including rice, maize and jute.

• Secondary industries include coal mining, crude petroleum,

cement and fertilizers.

• Assam accounts for about 15 per cent of India's crude output

and about 50 per cent of India's total onshore production of

natural gas.

• Muga silk, known for its natural shimmering gold colour is

extracted from a species of insect found only in the NER,

particularly in Assam.

Manipur

• The state produces paddy, wheat, maize, pulses, oilseeds

and rubber

• Handloom products are sarees, bed sheets, curtains and

woolen shawls.

• Bamboo production is above one mil ion tonne per annum

and the state is known for bamboo craft.

Arunachal

• Major agricultural produce is food grain, oil seeds and

Pradesh

pulses.

• Handicraft and industry provides employment to a large

section of the population.

Meghalaya

• Major crops and plantations include rice, maize, jute,

rapeseed, mustard, rubber and coffee.

• Agriculture employs more than 50 per cent of the total

workforce.

• Horticulture is widely practiced in the State.

• Major Crafts are cane and Bomboo-based.

Mizoram

• Bamboo forests in the state account for 14 per cent of the

total Bomboo forest area in India

• Bamboo is used in Construction, Agriculture, and allied

services and Micro Enterprises

EASE OF DOING BUSINESS IN NORTH EAST

23

• The State accounts for 12% of the total output of fruits in the

NER.

Nagaland

• 70 per cent of the population is dependent on agriculture.

• Main crops include rice, mil et, maize and pulses.

• Major crafts are artistic textiles, cane and bamboo.

• Straw, woodwork and metalware.

Sikkim

• Main crops produced are rice, wheat and maize.

• Sikkim produces 80 per cent of India's large cardamom.

• Sikkim is famous for its local y grown ‘Temi’ tea.

• Liquor industry is the major source of excise revenue.

Tripura

• Second-largest producer of rubber in India.

• Largest producer of True Potato Seed (a high yield variety) in

India.

• Fifth-largest in tea production, among the 14 tea producing

states in India.

INFRASTRUCTURE

Roads and Railways

Road is an important mode of travel in the hil y areas as other mode of travel is

either too expensive or difficult. The North East Road Sector Development Scheme

is a one of the major initiatives of state government to take up rehabilitation/

construction/ upgradation of interstate roads, roads in socio-political y neglected

pockets of NER, roads required for security and strategic viewpoint not covered in

any other programmes and roads of economic importance linking and providing

market access to the agricultural products. Committees are formed under the

scheme for effective functioning and scrutinising the projects from development

to implementation stage. Ministry of DoNER is authorised to release funds and

critically evaluate the successful allocation of funds, at various stages of project

implementation.

24

EASE OF DOING BUSINESS IN NORTH EAST

Exhibit 13

Road Wise Details of the neglected Inter-State Roads

(orphan roads)

Length of Road in Km

SI

Name of Road

Length of

Length of

Total

Neighbouring

No.

the Road

the Road

State

in the

in

concerned

neighbouring

State (KM)

state (KM)

ARUNACHAL

PRADESH

1

Mirem-Mikong-

16.83

5.6

22.43

Assam

Jonai road

2

Jote-Balijan road

47

13.1

60.1

Assam

3

Mebo-Dhol a road

37.5

30

67.5

Assam

4

Marglierita-

16.06

13.1

29.16

Assam

Deomali road

5

Longding-

44

13

57

Assam

Bitnalpur road

6

C/o road from

27

10

37

Assam

Manmao to North

Tirap Gate near

Ledo NH-38 in

Assam

7

Jagun-Namchik-

27

8.15

35.15

Assam

Miao road

S

Tezu-Sadiya road

16.17

16.5

32.67

Assam

9

Doimara to Tenga

98

15

113

Assam

road in West

Kameng District

10

Doimukh to

6

10

16

Assam

Harmuti road

TOTAL

335.56

134.45

470.01

EASE OF DOING BUSINESS IN NORTH EAST

25

MEGHALAYA

1

Rongsai-Bliosjora-

18.22

30

48.22

Assam

Bajengdoba (RBB)

road (Assam por-

tion from Rongsai

to Bhorjora)

2

Tura-Mankachar

19

2

21

Assam

road (Assam

portion) connecting

to Ferryghat

3

Sualmari to

0

7

Assam

Nabang bazar

connecting NH-51

in Assam

4

Lakhipur to

0

15

15

Assam

Abirampara

connecting AMPT

road at 19th Km

5

Tikrikil a bazar to

0

3

3

Assam

Sathaimari

6

Damra-

0.71

3

3.71

Assam

Medhipathar road

to Bangsi Apai via

Nishangram

7

Krishnai-

0.12

14

14.12

Assam

Mendhipathar

road

8

Amjonga-

3

3.5

6.5

Assam

Baksalpara road

9

Siluk to Mendima

1.2

5

6.2

Assam

10

Darangre to

1

5

6

Assam

Kharkutta road

11

Dhupdhara to

1.2

12

13.2

Assam

Adokgre road

12

Kattakuti

2

13

15

Assam

Badakata road

26

EASE OF DOING BUSINESS IN NORTH EAST

13

Krislinai

0.12

13.2

13.32

Assam

Resubelpara road

14

Mukroh Uinspar

S

4

12

Assam

linking Jrikyndeng

road

15

Mawshynrut-

37

14.6

51.6

Assam

Hali m-Boko road

16

Umsning-Jagi road

79.6

14.6

94.2

Assam

TOTAL

171.17

158.9

330.07

MANIPUR

1

Tamei-Terming

21.6

54

75.6

Nagaland

Road

2

Tadubi Pfutsero

13

94

107

Nagaland

Road

3

Tamenglong

91

11

102

Assam

Haflong Thosem

Road

TOTAL

125.6

159

284.6

MIZORAM

1

Zamuang-Hripaw-

47

14

61

Assam

Durlabhcherra road

2

Kawnpui-Bairabi

15

15

30

Assam

3

Sherklian-

0

16.5

16.5

Assam

Bhagabazar

4

Khawzawl-Sinzawl

0

50

50

Manipur

5

Lower Poo Kanlimun

27

27

54

Assam

TOTAL

89

122.5

211.5

NAGALAND

1

Kangtsungyimsen

5

18

23

Assam

to Akhel (Assam)

2

Anaki C to Akhel

11

11

22

Assam

(Assam)

3

Dimapur to Delai

7,5

0

7.5

Assam

Gate (NH-36)

EASE OF DOING BUSINESS IN NORTH EAST

27

4

Dimapur to NH-39

1.86

0

1.86

Assam

5

Mon-Namtola-

13

11

24

Assam

Sonari

6

Wokha-Merapani-

3

34

37

Assam

Golaghat

7

Pfutsero-Tadubi

94

13

107

Manipur

NH-39

S

Kohima-Bokajan

5

24

29

Assam

9

Lougchem-

13

12

25

Assam

Naginijan via

Saring

10

Mangkolemba to

22

4.2

26.2

Assam

Alongtaki to

Nakachari

11

Lirmen to

17

10

27

Assam

Deodar Ali

12

Yajang C to

10

9

19

Assam

Selanghat

13

Yajang C to

9

12

21

Assam

Haluating

TOTAL

211.36

158.2

369.56

GRAND TOTAL

932.69

733.05

1665.74

Exhibit 14

Road Density 2008

States

Road density per

Road density per

1000 Sq. KM

1000 population

Arunachal

196.96

13.77

Assam

2936.51

7.83

Manipur

739.11

6.98

Meghalaya

438.67

3.89

Mizoram

292.11

6.35

28

EASE OF DOING BUSINESS IN NORTH EAST

Nagaland

1345.32

10.27

Sikkim

263.95

3.17

Tripura

3026.23

9.09

India

965.73

2.77

Source: 1. Material supplied by TRW, M/o Raod Transport & Highways

2. Annual Report, published by M/o Road Transport & Highways

* Excludes roads constructed under JRY and PMGSY

To address the issue of Road Density, the Ministry of Road Transport and Highways

(Morth) has been paying special attention to the development of national highways

in the region. The ministry has earmarked 10% of the total allocation for the NE

region. The total length of NHs in the region is 8,480 km and these are being

developed and maintained by three agencies-the state Public Works Departments,

Border Road Organization (BRO) and National Highway authority of India (NHAI).

Of the total length of 8,480 km, about 2,118 km is with the BRO and 5,409 km is

with the respective state PWDs. The remaining length of 953 km is with the NHAI.

There has also been a special thrust in building the road infrastructure. Sufficient

funds have also been allocated in building the road infrastructure in the NE

states. The states have 2,473 km of NHs, 5,711 km of state highways, and 15,154

km of major district roads. The states have funds (from various agencies such as

Asian Development Bank, etc.) to upgrade the worn out state roads.

In most NE states, vil age and district roads are dominant. These roads are

particularly important for facilitating intra-state movement of people and freight.

A snapshot of the road lengths in the various states of the region is as fol ows:

Exhibit 15

Road Length in NER: A Snapshot

States

Arunachal

Assam Manipur Megha- Mizoram Nagaland Sikkim Tripura

Pradesh

laya

National

1,992

2,836

959

810

927

494

62

400

highways

State

–

3,134

668

1,134

259**

404**

186

689

highways

Major

12,169

4,413

964

1,219

--

2,387

1,720

90

district

roads

Rural

5,455 1,88,850

6,305

1,569

1,972

22,095

2,326 16,415

raod*

EASE OF DOING BUSINESS IN NORTH EAST

29

Urban

33

6,664

210

110

325

98

162

280

raod*

Project

1,088

8,493

-

940

35

269

5

1,346

road*

Source : Ministry of Road Transport & Highways, CMIE State of India

**2007-08 data

*2010-11 data

Major Road Development Projects in NER

The major road development programmes that are being undertaken in the

region are as fol ows:

1. National Highway Development Programme (NHDP)-I proposes to link

the east-west corridor beginning at Porbandar, Gujarat to the NE through

a 678 km four-lane highway connecting Silchar to Srirampur via Lumding-

Daboka-Nagaon-Guwahati in Assam. This has been entrusted to the NHAI

under the NHDP phase-I .

2. NHDP-I I proposes to widen 1,051 km stretches of various NHs to improve

connectivity of state capital towns.

Exhibit 16

National Highway Development Programme I I

NH No.

State

Stretch

Length

36/39

Assam/Nagaland

DabokaOimapir

124

39

Naaland/ManipLT

Kohima-lTiDTal

140

Meghafya/Assam

Shil ong-Chutaibari

252

54

Assam & Mizoram

Silchar-Aizwal

190

3. The Arunachal Pradesh Road Development Project envisages improving

the connectivity to the Arunachal Pradesh through:

• Construction of public roads to link the hydel power project

• Four-lane connectivity to Itanagar

• Two-lane connectivity of district headquarters

• Trans-Arunachal highway

4. Special Accelerated Road Development Programme for North East (SARDP-

NE) Phases ‘A’ and ‘B’ wil cover construction and improvement of 8,737

30

EASE OF DOING BUSINESS IN NORTH EAST

km of road length. Major objectives of this programme includes providing

a two-lane NH connectivity to al state capitals with East-west corridor,

providing connectivity to all district headquarter of NER by at least a two-

lane road and providing inter-connectivity to all the state capitals by at

least a two-lane NH.

Besides, there is a proposal to connect India and Myanmar through a single road

running on either side of the borders. Earlier, the stretch of road in Myanmar was

to start from Kaletwa, which wil now start from Paletwa. The DPR for this new

stretch is being prepared. In India, the road is to start from Lawngtlai in Mizoram.

The technical specification of the road has been revised and consequently revised

cost estimates are being worked out.

EASE OF DOING BUSINESS IN NORTH EAST

31

CHAPTER II

EASE OF DOING BUSINESS- MAJOR MILESTONES

Introduction

India’s rank in the Doing Business Report 2015 was 142 among 189 countries

which improved to 130 in the Doing Business Report, 2016. Government of India

has emphasized on the importance of ‘Ease of Doing Business’ and it is a major

pil ar of ‘Make in India’ initiative. It is working extensively on improving India’s

rank in the World Bank Group’s Doing Business Study.

Investment Promotion

The World Banks’ Doing Business 2017 report shows that for the first time the

absolute score of ‘Distance to Frontier’ that measures the gap between India and

the global best practice has increased for two consecutive years. It has improved

by 2.5% from 55.27 to 53.93 over a period of last one year. A Memorandum of

Understanding (MoU) was signed between India and UK to support Ease of

Doing Business in India. Anational conference on Ease of Doing Business was

organized with support from Government of UK to disseminate the best practices.

Through constant efforts, States too have been brought on board in the process to

expand the coverage of these efforts. The rankings of the States/UTs based on

340-Point Business Reform Action Plan released on 31st October 2016, show that

national implementation average of reforms undertaken by States/UTs stands at

48.93%, significantly higher than last year’s national average of 32%. It also

shows that 12 States scored more than 90 % as against none last year. Under Start

Up India initiative 129 crore committed by SIDBI to Venture Funds.

Notification issued by RBI allowing Foreign VCs to invest in equity or equity linked

or debt instrument issued by an Indian startup without RBI approval. Notification

issued for Relaxed Norms of Procurement in Government Departments and CPSUs.

Funds for 10 Startup Centres released and 9 Technology Business Incubators

approved. Establishment of Atal Tinkering Labs: NITI Aayog has announced a list

of 257 schools.

31

32

EASE OF DOING BUSINESS IN NORTH EAST

Incentives for Industries of North East and Himalayan States –

North East Industrial and Investment Promotion Policy, 2007 revised with

notification on 22nd Nov, 2016 for resumption of registration process for new

industrial units that had commenced production on or after 01.12.2014. Committee

headed by CEO, NITI Aayog to suggest a roadmap for a new industrial policy for

the region.

Highlights

• Requirement of minimum paid up capital and common seal under the

Companies Act 2013 done away with.

• Registration for Permanent Account Number (PAN)

• Tax Deduction Account Number (TAN), EPFO (Employees’ Provident Fund

Organization) and ESIC (Employee’s State Insurance Corporation) and

incorporation of company can be done through a single form on eBiz

portal.

• Times taken for obtaining PAN and TAN on eBiz portal has been brought

down to T+1 days.

• Provision for applying for company name and Director Identification

Number (DIN) at the time of incorporation with single Form INC29 has

been made.

• Online and real time registration of ESIC and EPFO has been introduced.

• Provision for online payment of EPFO and ESIC contributions has been

introduced.

• Requirement of bank account for registration with EPFO and ESIC has

been eliminated.

• Central Registry Rules have been amended to record security interests of

all types of property.

• Number of documents required for imports and exports have been reduced

to three.

• Physical submission of documents for export and import is not required.

They can be submitted electronically by using digital signatures.

• Custom ICEGATE Portal has been integrated with Food Safety and Standards

• Authority of India (FSSAI), Animal and Plant Quarantine, Drug Control er

and Wildlife Control Bureau for imports.

EASE OF DOING BUSINESS IN NORTH EAST

33

• ShramSuvidha Portal has been launched to facilitate risk based

Inspections, submission of common electronic returns under 8 Labour

Acts and issue of Labour Identification Number.

• Insolvency and Bankruptcy Code with provision of easy and faster exit,

has been passed by the Parliament.

State Level Regulatory Reforms

A 98 point Action Plan for State business reforms was prepared in December,

2014. The Action Plan was implemented by the States/Union Territories by 30th

June, 2015. An assessment of implementation of these reforms was carried out

by DIPP and published on 14th September, 2015. The assessment included ranking

States on the level of implementation of the 98 point Action Plan.

A similar exercise has been undertaken for the year 2016. A 340 point Action Plan

has been prepared for implementation by the State Governments after detailed

stakeholder consultation. State Governments have been requested to complete

these reforms by 31st March, 2016.

An online Dashboard for status update by the State Governments on the Action

Plan and real-time ranking of States wil be launched on 1st April, 2016. State

Governments shall be able to upload evidence of completion of each action

point. On validation of the same by DIPP, the rank of the State shall be updated

accordingly.

In majority of states online filing and payment of Value Added Tax and Central

Sales Tax have been implemented. Many states have eliminated pre-registration

VAT inspections and replace them with post-registration advisory visits.

A number of states have implemented Common Application Form and established

dedicated single windows, backed by legislation or state notifications to establish

and empower them. Clear timelines has been laid down for processing

applications related to construction permits which wil help investors to plan their

construction effectively.

Some states have allowed for self-certification under the Minimum Wages Act,

1948, the Shops and Establishment Act and Payment of Wages Act, 1936.

A few states and UTs issue factory licenses with a validity of 5 years or more.

Under environmental procedures some states have exempted green industries

from Pol ution Control Board clearance prior to business startup.

Ease of Doing Business Ranking

In recent years, the ease of doing business (EDB) rank has become one of the

34

EASE OF DOING BUSINESS IN NORTH EAST

most widely watched and discussed statistic in Indian policy economic policy

circles and more so in India over the last year. Ensuring sustainable growth is one

of the key goals of policymakers in India. A better EDB rank is seen as a critical

factor in achieving this goal.

The EDB index is meant to measure regulations directly affecting businesses and

does not directly measure more general conditions such as a nation’s proximity

to large markets, quality of infrastructure, inflation, crime, and other social factors.

A nation’s ranking on the index is based on the average of 10 sub-indices:

(a) Starting a business : Procedures, time, cost and minimum capital to open

a new business

(b) Dealing with construction permits: Procedures, time and cost to build a

warehouse

(c) Getting electricity: procedures, time and cost required for a business to

obtain a permanent electricity connection for a newly constructed

warehouse

(d) Registering property: Procedures, time and cost to register commercial

real estate

(e) Getting credit: Strength of legal rights index, depth of credit information

index

(f) Protecting investors: Indices on the extent of disclosure, extent of director

liability and ease of shareholder suits

(g) Paying taxes: Number of taxes paid, hours per year spent preparing tax

returns and total tax payable as share of gross profit

(h) Trading across borders: Number of documents, cost and time necessary

to export and import

(i) Enforcing contracts: Procedures time and cost to enforce a debt contract

(j) Resolving insolvency: The time, cost and recovery rate under bankruptcy

proceedings.

The EDB has been widely known and used by academics, policy-makers,

politicians, development experts, journalists and the business community to

highlight red tape and promote reforms. As stated by the IEG study from the World

Bank: “For country authorities, it sheds a bright, sometimes unflattering, light on

regulatory aspects of their business climate. For business interests, it has helped

to catalyze debates and dialogue about reform.

The ranking of countries on the basis of the EDB index, has been criticized by

EASE OF DOING BUSINESS IN NORTH EAST

35

experts in the World Bank itself. One of the arguments is that, instead of having a

single headline index, it would be advisable to have separate rankings for each

individual indicator, now aggregated into the main index. There are several crucial

problems relating to the index as a barometer that can work as a guideline for

investors. The debate was about whether a higher ranking implied that a country

was on the right track of private sector development. Another criticism has been

that, basical y, countries that have no labour regulations what so ever get the best

marks.

India now ranks 130 out of 189 countries in terms of EDB, moving up four places

from last year’s adjusted ranking of 134. The contributing improvement has been

in three key areas: 1) Starting a business; 2) Getting construction permits; and 3)

Getting Electricity.

An analysis of public affairs index 2016 provides comparative picture of the

achievements and performance of the states in relation to parameters that have

an impact on enterprise development. Unlike the ease of doing business index,

the Public Affairs Index (PAI) offers a more realistic measure, which depicts the

Indian reality better. This index captures ten variables that are more representative

of the Indian situation.

Enterprise development depends on certain conducive factors like the freedom

of choice or economic freedom enjoyed by the people, besides availability and

quality of appropriate infrastructure and the fiscal discipline of the government.

Public Affairs index built on these parameters ranks various Indian states. The

extent of Economic Freedom is reflected in the level of ease of doing business

prevalent in the State. The number of business entities in the formal sector is also

an indication of the open mindset of the people towards entrepreneurship. A

high index of business activity is indicative of the relative efficiency of the administrative set up in the state in promoting ad supporting enterprises and

entrepreneurship. The PAI results were reworked by the ISED Smal Enterprise

Observatory to the context of the present discussion. The fol owing data and the

charts indicate the relationship between the observed advancement of the states

and the effect of the selected parameters.

36

EASE OF DOING BUSINESS IN NORTH EAST

Exhibit 17

PAI Public Affairs Index

EASE OF DOING BUSINESS IN NORTH EAST

37

CHAPTER III

INDUSTRIAL DEVELOPMENT IN

NORTH EASTERN REGIONS

Overview

The Government has taken several initiatives for development of industries in the

North Eastern Region. Policies and Programmes are directed towards

development of infrastructure, entrepreneurship skil s, markets and providing

flow of credits to the entrepreneurs. The orientation of the programmes are

focussed to a large extent on (i) Cluster-based approach to industry, (i ) Industries

based on local resources within the Region, and (i i) encouraging the industries

in the medium and smal -scale sectors. The Ministry has, through the North

Eastern Development Finance Corporation Ltd. (NEDFi), undertaken techno-

economic studies and resources mapping for the development of industries in

the North Eastern Region. The areas so far covered in the study include inter-alia,

medicinal and aromatic plants, agriculture, livestock and poultry development,

tourism, software development, handloom and handicrafts and food processing.

The focus of the Government has been to upgrade the infrastructure in the North

Eastern Region. Government has taken up several projects for improvement in

road, rail, air, communication, waterways and telecom network in the region.

Addressing connectivity issues assumed a new seriousness. Government has

set up National Highways and Infrastructure Development Corporation Limited

(NHIDCL) in 2014, which is now fast tracking road building activity. NHIDCL has

also undertaken upgradation of neglected, but critical inter-state roads, a new

scheme launched by Ministry of Development of North Eastern Region.

The North East is now better connected with broad gauging of the major rail

networks in the entire region, the last being from Silchar to Agartala.

Heavy investment has been made in power transmission with two projects

covering all the 8 states sanctioning the total cost of Rs.9865 crores in order to

reach power to more areas.

The Comprehensive Telecom Development Plan with a budget of Rs.5336 crore

37

38

EASE OF DOING BUSINESS IN NORTH EAST

has enabled better mobile connectivity with new nodes at district, block and

gram panchayat levels. Internet services got a boost with the recent launch of

international internet gateway from Cox’s Bazar in Bangladesh to Agartala, making

it the third in the country after Mumbai and Chennai.

Thrust has been given for promotion of Handlooms & Handicrafts in the North

Eastern Region. Under the North Eastern Region Textile Promotion Scheme, an

amount of Rs. 286 crore has been spent during the last two years.

The DoNER Ministry organised a mega-event “Destination North East-2016” from

12th -14th February, 2016 at PragatiMaidan, ITPO, New Delhi to showcase the

inherent economic, social and cultural strength, potential and opportunities in

the North East Region. The North East-ASEAN Business Summit was organized

during April 7th-9th, 2016 at Imphal, Manipur. A meeting on “Economic

Cooperation Dialogue in Eastern South Asia: Transport Corridors and Border

Special Development Zones” was jointly organized by UNESCAP, Government of

Meghalaya and North Eastern Council at Shil ong during, April 25 -26, 2016.

Government is implementing various schemes/programmes for promotion,

upgradation and development of Micro, Smal and Medium Enterprises throughout

the country including NER region. The major schemes/programmes include Prime

Minister’s Employment Generation Programme (PMEGP), Credit Guarantee

scheme, Credit Linked Capital Subsidy Scheme (CLCSS), National Manufacturing

Competitiveness Programme, Cluster Development Programme, International

Cooperation Scheme etc. Efforts have been undertaken to motivate entrepreneurs

to invest in sectors like plastics and polymers, tourism and hospitality, information

technology, food processing, aromatic and medicinal plants, sericulture,

horticulture and floriculture, handlooms and handicrafts and bamboo processing

etc. Some entrepreneurs have set up their venture and taken assistance from

NEDFi. In addition, North Eastern Council has supported a number of projects

posed by State Governments relating to development of work-sheds and marketing

of produce.

This was stated by the Minister of State (Independent Charge) for Development of

North Eastern Region (DoNER), MoS PMO, Personnel, Public Grievances, Pensions,

Atomic Energy and Space, Dr. Jitendra Singh in written reply to a question by Dr.

Sanjay Sinh in the RajyaSabha today.

Rubber and bamboo are among the important agricultural produces which can

attract a lot of investment opportunities. Tripura is the chief production hub and

has been declared as the ‘second rubber capital of India’ right after Kerala by the

Indian Rubber Board. The state has the potential to produce 10,000 hectares of

rubber (the available plantation area is 35,760 hectares). Other rubber producing

EASE OF DOING BUSINESS IN NORTH EAST

39

states in the region are Mizoram and Assam. Coupled with the fact that globally

India ranks third in the production and fourth in the consumption of rubber creates

a huge market for investors. The NE states also produce a substantial percentage

of bamboo, accounting for 65% of India’s production value and 20% of the global

production value. Mizoram alone contributes to around 40% of the country’s

bamboo production. While India’s bamboo market is expected to grow to 5.5

bil ion USD by 2015, the UN’s Industrial Development Organisation estimates the

NE’s bamboo production to grow up to 1.25 bil ion USD in the same period.

Realizing Growth Potential of North Eastern Region

The region’s comparative advantages in producing fruits, vegetables and other

horticulture products can be tapped by setting up small-scale processing units

for the local market which wil also boost rural employment. This set-up is

economical y viable as well as doable as a small processing unit requires little

capital. The region produces a large amount of spices such as chil ies, gingers,

mustard seeds, fruits and vegetables which can be processed and marketed

locally.

Arunachal Pradesh has taken up the cultivation of horticulture produce especial y

of sub-tropical fruits on a large scale with assistance from the government. In

Mizoram, which accounts for 12% of the total fruits produced in the north east, a

special purpose vehicle (SPV) has been formed with private sector companies to

set up a plant for the processing of turmeric, ginger, chil y, fruits and other

horticulture products. In Manipur, organic farming is the most sought-after practice

in the hil areas. The state government has given special impetus to farming for

pineapple, passion fruit, mushroom, etc. on a massive scale. With proper

processing, many of the agri-horticultural crops of the state look promising for

export. Another focus area for the agro based industry is the processing for

extracts of spices, medicinal and herbal plants. The state government has

established a food park at Nilakuthi with a project cost of 6.6 mil ion USD. This

park wil provide common facilities like cold storage, warehouse, quality control

laboratories, packaging, tool room, power and water supply, sewerage treatment,

etc. The Nagaland Food Private Limited (NFPL) established in the Dimapur Industrial

Estate specializes in bamboo shoot processing, pineapple, passion fruit and

orange juice processing. The food and meat processing sector also provides

immense potential for investment in the state. The Nagaland Industrial

Development Corporation has received approval for developing an agro and

food processing SEZ in Dimapur.

There is also scope for dairy processing and poultry, fishery processing in the

region. There is huge demand for dried fish in the region, processing of which is

40

EASE OF DOING BUSINESS IN NORTH EAST

not capital intensive. The National Dairy Development Board (NDDB), which has

extensive experience in mobilising producers in milk, vegetables as well as

other areas, could play a key enabling role in this process. Increase in milk

production wil encourage the milk, butter and cheese processing industry in the

region.

Private entrepreneurs need to be encouraged to set up storage, distribution and

marketing infrastructure such as a cold storage chain along major arterial

highways. This wil help exploit the horticulture potential of the region and bring

perishables speedily to marketing hubs. For cold chain operations, a public-

private partnership (PPP) or lease could also be explored. Similar initiatives can

already be seen in Meghalaya and Mizoram where flowers are being distributed

outside the region by a private distributor, Zopar, which also supplies seed varieties

to farmers.

Exhibit 18

Positive Changes in NER

Source: Planning Commission

EASE OF DOING BUSINESS IN NORTH EAST

41

Exhibit 19

Documents/Clearances required for setting up a Micro Smal and Medium

Enterprise in Arunachal Pradesh

NOC’s and Clearances

1

Pol ution Control Board to Set Up

2

Forest and Environment Department in case of Forest Based Industries

3

Geology and Mining Department in case of Mineral based industries

4

Registration of EM Part I and Part I shall be issued by DIC, authority

5

Load Sanction from power department, for power intensive unit

6

State food adulteration board in case of food related enterprises

7

Registration under Factory and Boiler Act

8

Local Body

Documents Required

1

Trading license from concern deputy commissioner/Director Trade and

Commerce (prior to Arunachal Pradesh State Industrial Policy 2009,

Trading License were issued to APST only. However, under Industrial

policy 2008, the Trading license wil be issued to outside investor also

for Industries/Enterprises which involve investment of minimum of Rs.

5.00 crores in Plant and Machineries, and in case of Service Sector the

minimum investment on equipment should not less than Rs.2.00 corers

to qualify for obtaining trading license).

2

ST certificate for APST from respective Deputy Commissioner

3

Land availability certificate fro Deputy Commissioner

4

Lease deed agreement in case of lease

5

Sketch map of the proposed land

6

Land allotment order issued from land record and land management

department

7

DPR in triplicate

8

Registration under Arunachal Goods Tax Act

Source: National Informatics Centre, Arunachal Pradesh State Centre, Itanagar

42

EASE OF DOING BUSINESS IN NORTH EAST

NEDFi is an ISO 9001:2008 certified company since 2001 and the mission is the

economic development of the North Eastern Region of India by identifying,

financing and nurturing commercial y and financial y viable projects in the region.

It is notified as a Public Financial Institution under Section 4A of the said Act and

was registered as an NBFC in 2002 with RBI. The shareholders of the Corporation

are IDBI, SBI, LICI, SIDBI, ICICI, IFCI, SUUTI, GIC and its subsidiaries. The management of NEDFi has been entrusted upon the Board of Directors comprising

representatives from shareholder institutions, DoNER, State Governments and

eminent persons from the NE Region and outside having wide experience in

industry, economics, finance and management.

NEDFi provides financial assistance to micro, smal , medium and large enterprises

for setting up industrial, infrastructure and agri-al ied projects in the North Eastern

Region of India and also Microfinance through MFI/NGOs. Besides financing, the

Corporation offers Consultancy & Advisory services to the state Governments,

private sectors and other agencies. We conduct sector or state specific studies

under its Techno-Economic Development Fund (TEDF) and is the designated nodal

agency for disbursal of Govt. of India incentives to the industries in the North-East

India under North–East Industrial and Investment Promotion Policy 2007 (NEI PP

2007). The promotional activities of NEDFi include mentoring through BFC, Water

Hyacinth Craft, NEDFi Convention Center, NEDFiPavil ion etc.

Exhibit 20

Indigenous Approach and Growth Levers

Source: Planning Commission

EASE OF DOING BUSINESS IN NORTH EAST

43

Exhibit 21

Literacy Rates and Sector-wise distribution of Workers

Exhibit 22

Share of NE States in production of major crops (2008-09)

NE state

Rice

Wheat

Cereals

Pulses

Food grains

Oil seeds

Prod Share

Prod

Share

Prod Share Prod Share

Prod Share

Prod Share

(%)

(%)

(%)

(%)

(%)

(%)

Arunachal

163.9

0.17

5.2

0.01

77.7

0.19

9.0

0.06

255.8

0.11

30.5

0.11

Pradesh

Assam

4008.5

4.04

54.6

0.07

15.4

0.04

64.5

0.44 4143.0

1 .77 137.9

0.50

Manipur

397.0

0.40

-

-

11.5

0.03

6.5

0.04

415.0

0.18

0.7

0.00

Megha-

203.9

0.21

0.7

0.00

27.3

0.07

3.9

0.03

236.3

0.10

7.1

0.03

laya

Mizoram

46.0

0.05

-

-

9.3

0.02

3.6

0.02

58.9

0.03

2.5

0.01

Nagaland

345.1

0.35

2.1

0.00

127.3

0.32

39.7

0.27

514.2

0.22

71.5

0.26

Sikkim

21.7

0.02

7.8

0.01

66.2

0.17

11.8

0.03

107.5

0.05

7.4

0.03

Tripura

627.1

0.63

1.2

0.00

2.0

0.00

4.4

0.03

634.7

0.27

2.5

0.01

NE Region

5813.2

5.9

71.6

0.1 337.2

0.8 143.4

1.0 6365.4

2.7 260.1

0.9

Al India

99182.4

100 80679.4

100 40037.9

100 14566.7

100 234466.4

100 27719.0

100

Note: Production in thousand tonnes

Share % share in al India production

Source: Agricultural Statistics at a Glance, Ministry of Agncuiture, Government of India.

44

EASE OF DOING BUSINESS IN NORTH EAST

Exhibit 23

Forest Cover 2011

States

Geographical area

Forest cover

% Forest cover

Aruanchal

83743

67410

80.5%

Assam

78438

27673

35.3%

Manipur

22327

17090

76.5%

Meghalaya

22429

17275

77.0%

Mizoram

21081

19117

90.7%

Nagaland

16579

13318

80.3%

Sikkim

7096

3359

47.3%

Tripura

10486

7977

76.1%

NER

262179

173219

66.1%

Al India

3287263

692027

21.1%

Areas in Sq. Km

Source: Forest Survey of India

This is due to the limited land available for agriculture. The region has a forest

cover of more than 66.1% (ranging from 35.3% in Assam to 90.7% in Mizoram)

against the national average of 21.1%. Even though, it accounts for about 8% of

the total geographical area of the country, it has only 3.4% of land for agricultural

purposes (CMIE, 2007). It contributes only 2.8% to the total agricultural production,

underscoring the low productivity of the region (RBI, 2005).

Roads and Railways connectivity in NER

Road is an important mode of travel in the hil y areas as other mode of travel is

either too expensive or difficult. The North East Road Sector Development Scheme

is a one of the major initiatives of state government to take up rehabilitation/

construction/ upgradation of interstate roads, roads in socio-political y neglected

pockets of NER, roads required for security and strategic viewpoint not covered in

any other programmes and roads of economic importance linking and providing

market access to the agricultural products. Committees are formed under the

scheme for effective functioning and scrutinising the projects from development

to implementation stage. Ministry of DoNER is authorised to release funds and

critically evaluate the successful allocation of funds, at various stages of project

implementation.

EASE OF DOING BUSINESS IN NORTH EAST

45

Exhibit 24

Road Wise Details of the neglected Inter-State Roads

(orphan roads)

Length of Road in Km

SI

Name of Road

Length of

Length of

Total

Neighbouring

No.

the Road

the Road

State

in the

in

concerned

neighbouring

State (KM)

state (KM)

ARUNACHAL

PRADESH

1

Mirem-Mikong-

16.83

5.6

22.43

Assam

Jonai road

2

Jote-Balijan road

47

13.1

60.1

Assam

3

Mebo-Dhol a road

37.5

30

67.5

Assam

4

Marglierita-

16.06

13.1

29.16

Assam

Deomali road

5

Longding-

44

13

57

Assam

Bitnalpur road

6

C/o road from

27

10

37

Assam

Manmao to North

Tirap Gate near

Ledo NH-38 in

Assam

7

Jagun-Namchik-

27

8.15

35.15

Assam

Miao road

S

Tezu-Sadiya road

16.17

16.5

32.67

Assam

9

Doimara to Tenga

98

15

113

Assam

road in West

Kameng District

10

Doimukh to

6

10

16

Assam

Harmuti road

TOTAL

335.56

134.45

470.01

46

EASE OF DOING BUSINESS IN NORTH EAST

MEGHALAYA

1

Rongsai-Bliosjora-

18.22

30

48.22

Assam

Bajengdoba (RBB)

road (Assam por-

tion from Rongsai

to Bhorjora)

2

Tura-Mankachar

19

2

21

Assam

road (Assam

portion) connecting

to Ferryghat

3

Sualmari to

0

7

Assam

Nabang bazar

connecting NH-51

in Assam

4

Lakhipur to

0

15

15

Assam

Abirampara

connecting AMPT

road at 19th Km

5

Tikrikil a bazar to

0

3

3

Assam

Sathaimari

6

Damra-

0.71

3

3.71

Assam

Medhipathar road

to Bangsi Apai via

Nishangram

7

Krishnai-

0.12

14

14.12

Assam

Mendhipathar

road

8

Amjonga-

3

3.5

6.5

Assam

Baksalpara road

9

Siluk to Mendima

1.2

5

6.2

Assam

10

Darangre to

1

5

6

Assam

Kharkutta road

11

Dhupdhara to

1.2

12

13.2

Assam

Adokgre road

12

Kattakuti

2

13

15

Assam

Badakata road

EASE OF DOING BUSINESS IN NORTH EAST

47

13

Krislinai

0.12

13.2

13.32

Assam

Resubelpara road

14

Mukroh Uinspar

S

4

12

Assam

linking Jrikyndeng

road

15

Mawshynrut-

37

14.6

51.6

Assam

Hali m-Boko road

16

Umsning-Jagi road

79.6

14.6

94.2

Assam

TOTAL

171.17

158.9

330.07

MANIPUR

1

Tamei-Terming

21.6

54

75.6

Nagaland

Road

2

Tadubi Pfutsero

13

94

107

Nagaland

Road

3

Tamenglong

91

11

102

Assam

Haflong Thosem

Road

TOTAL

125.6

159

284.6

MIZORAM

1

Zamuang-Hripaw-

47

14

61

Assam

Durlabhcherra road

2

Kawnpui-Bairabi

15

15

30

Assam

3

Sherklian-

0

16.5

16.5

Assam

Bhagabazar

4

Khawzawl-Sinzawl

0

50

50

Manipur

5

Lower Poo Kanlimun

27

27

54

Assam

TOTAL

89

122.5

211.5

NAGALAND

1

Kangtsungyimsen

5

18

23

Assam

to Akhel (Assam)

2

Anaki C to Akhel

11

11

22

Assam

(Assam)

3

Dimapur to Delai

7,5

0

7.5

Assam

Gate (NH-36)

48

EASE OF DOING BUSINESS IN NORTH EAST

4

Dimapur to NH-39

1.86

0

1.86

Assam

5

Mon-Namtola-

13

11

24

Assam

Sonari

6

Wokha-Merapani-

3

34

37

Assam

Golaghat.

7

Pfutsero-Tadubi

94

13

107

Manipur

NH-39

S

Kohima-Bokajan

5

24

29

Assam

9

Lougchem-

13

12

25

Assam

Naginijan via

Saring

10

Mangkolemba to

22

4.2

26.2

Assam

Alongtaki to

Nakachari

11

Lirmen to

17

10

27

Assam

Deodar Ali

12

Yajang C to

10

9

19

Assam

Selanghat

13

Yajang C to

9

12

21

Assam

Haluating

TOTAL

211.36

158.2

369.56

GRAND TOTAL

932.69

733.05

1665.74

Exhibit 25

Road Density 2008

States

Road density per

Road density per

1000 Sq. KM

1000 population

Arunachal

196.96

13.77

Assam

2936.51

7.83

Manipur

739.11

6.98

Meghalaya

438.67

3.89

Mizoram

292.11

6.35

EASE OF DOING BUSINESS IN NORTH EAST

49

Nagaland

1345.32

10.27

Sikkim

263.95

3.17

Tripura

3026.23

9.09

India

965.73

2.77

Source: 1. Material supplied by TRW, M/o Raod Transport & Highways

2. Annual Report, published by M/o Road Transport & Highways

To address this The Ministry of Road Transport and Highways (Morth) has been

paying special attention to the development of national highways in the region.

The ministry has earmarked 10% of the total al ocation for the NE region. The total

length of NHs in the region is 8,480 km and these are being developed and

maintained by three agencies-the state Public Works Departments, Border Road

Organization (BRO) and National Highway authority of India (NHAI). Of the total

length of 8,480 km, about 2,118 km is with the BRO and 5,409 km is with the

respective state PWDs. The remaining length of 953 km is with the NHAI. There

has also been a special thrust in building the road infrastructure. Sufficient funds

have also been allocated in building the road infrastructure in the NE states. The

states have 2,473 km of NHs, 5,711 km of state highways, and 15,154 km of major

district roads. The states have funds (from various agencies such as Asian

Development Bank, etc.) to upgrade the worn out state roads.

In most NE states, vil age and district roads are dominant. These roads are

particularly important for facilitating intra-state movement of people and freight.

Exhibit 26

Road Length

A snapshot of the road lengths in the various states of the region is as fol ows:

Raod lengths (km)

India: 2011-12

States

Arunachal

Assam Manipur Megha- Mizoram Nagaland Sikkim Tripura

Pradesh

laya

National

1,992

2,836

959

810

927

494

62

400

highways

State

–

3,134

668

1,134

259**

404**

186

689

highways

Major

12,169

4,413

964

1,219

--

2,387

1,720

90

district

roads

50

EASE OF DOING BUSINESS IN NORTH EAST

Rural

5,455 1,88,850

6,305

1,569

1,972

22,095

2,326 16,415

raod*

Urban

33

6,664

210

110

325

98

162

280

raod*

Project

1,088

8,493

-

940

35

269

5

1,346

road*

Source : Ministry of Road Transport & Highways, CMIE State of India

**2007-08 data

*2010-11 data

The major road programmes that are being undertaken in the region are as

fol ows:

1. National Highway Development Programme (NHDP)-I proposes to link

the east-west corridor beginning at Porbandar, Gujarat to the NE through

a 678 km four-lane highway connecting Silchar to Srirampur via Lumding-

Daboka-Nagaon-Guwahati in Assam. This has been entrusted to the NHAI

under the NHDP phase-I .

2. NHDP-I I proposes to widen 1,051 km stretches of various NHs to improve

connectivity of state capital towns.

3. The Arunachal package envisages improving the connectivity to the

Arunachal dramatically. The package incorporates the fol owing:

• Construction of public roads to link the hydel power project

• Four-lane connectivity to Itanagar

• Two-lane connectivity of district headquarters

• Trans-Arunachal highway

4. Special Accelerated Road Development Programme for North East (SARDP-

NE) Phases ‘A’ and ‘B’ wil cover construction and improvement of 8,737

km of road length. Major objectives of this programme includes providing

a two-lane NH connectivity to al state capitals with East-west corridor,

providing connectivity to all district headquarter of NER by at least a two-

lane road and providing inter-connectivity to all the state capitals by at

least a two-lane NH.

Besides, there is a proposal to connect India and Myanmar through a single road

running on either side of the borders. Earlier, the stretch of road in Myanmar was

to start from Kaletwa, which wil now start from Paletwa. The DPR for this new

stretch is being prepared. In India, the road is to start from Lawngtlai in Mizoram.

The technical specification of the road has been revised and consequently revised

cost estimates are being worked out.

EASE OF DOING BUSINESS IN NORTH EAST

51

Railways are the best mode of mass transportation in the country. However, in

the hil y terrains of the NER it is difficult and expensive to setup rail networks. This

accounts for the absence or nominal presence of railway lines in hil y states like

Arunachal Pradesh, Manipur, Meghalaya and Mizoram.

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EASE OF DOING BUSINESS IN NORTH EAST

CHAPTER IV

BUSINESS REFORMS ACTION PLAN & STATE

POLICIES AND MEASURUES

FOR NORTH EASTERN REGION

Overview

Department of Industrial Policy and Promotion in 2016 came up with Business

Reforms Action Plan for States and Union Territories. Reforms were focused on

the fol owing areas:

1. Ensuring access to information and enable transparency: it was

recommended to simplify the various forms and checklist of activities that

were laid down at various stages such as pre-establishment, pre-

operation, establishment of business, and various state approvals

applicable to starting business. It was also proposed to issue a single id

for all state taxes. Various legislations were proposed to ensure time-

bound service delivery.

2. It was further decided to mandate and make arrangements to publish the

comments/ feedback received on the draft business regulation and how

they were addressed in the final regulation.

The research report (2015, September) assesses implementation status of reform

measures across eight areas as fol ows:

1 Setting up a Business

2 Al otment of Land and obtaining Construction Permit

3 Complying with environment procedures

4 Complying with labour regulations

5 Obtaining infrastructure related utilities

6 Registering and Complying with tax procedures

52

EASE OF DOING BUSINESS IN NORTH EAST

53

7 Carrying out inspections

8 Enforcing contracts

The major findings of the report indicated that effective implementation of the

reforms require all parties to have a shared vision. A Vision document outlining

what success means for each of the 285 questions was prepared and shared for

effective implementation at states. It was contemplated that states to aggressively

undertake a detailed communications campaign to ensure businesses are aware

of the improvements in the regulatory environment. Another element that wil

evoke successful implementation of the reforms is business feedback. The

assessment report reveals that states are at very different levels of implementation

of the 98 point action plan which is indicated in the state rankings as shown in the

table below:

The OECD Economic Survey (India)

Economic growth of around 7½% makes India the fastest-growing G20 economy.

The acceleration of structural reforms, the move towards a rule-based policy

framework and low commodity prices have provided a strong growth impetus.

Recent deregulation measures and efforts to improve the ease of doing business

have boosted foreign investment. Investment is stil held back by the relatively

high corporate income tax rates, a slow land acquisition process, regulations

which remain stringent in some areas, weak corporate balance sheets, high

non-performing loans which weigh on banks’ lending, and infrastructure

bottlenecks. Quality job creation has been low, held back by complex labour

laws.

Arunachal Pradesh State Industrial Policy 2008

The industrial policy, 2008 of Arunachal Pradesh is formulated to achieve the

investment-friendly environment in the state for industrial growth in the private/

joint venture/co-operative sectors for sustainable economic development of

Arunachal Pradesh. It aims to generate employment opportunities in the state

and make Arunachal Pradesh a preferred destination for outside investors. It

encourages the state to encourage local entrepreneurs to set up enterprise based

on local y available raw materials and further to promote export oriented handloom

and handicrafts. The policy wil encourage industrial units producing high value

low volume products.

Industries based on agricultural, horticulture and plantation, bamboo, cane

medicinal plants/herbs aromatic grass, teas, coffee etc, textiles, handicrafts and

sericulture electronics and IT based enterprises, and mineral based industries,

electronics and IT based enterprises, mineral based industries, facilitation and

54

EASE OF DOING BUSINESS IN NORTH EAST

development of industrial infrastructure, including power, communications etc

under PPP.

The policy aims to create special efforts for development of infrastructure by

promoting establishment of Industrial Estates, Industrial Growth Centres, Integrated

Infrastructure Development Centres, Smal Industries Cluster Development, Export

Promotion Industrial Parks, Export Promotion Zones, Special Economic Zone (SEZ),

Food Parks; strengthening of existing Industrial Estates, Border Trade Centres,

Industrial Cluster Development etc. Entrepreneur(s)/ a group of entrepreneurs/

consortium of industries is allowed 100% equity holding / ownership of their

industrial unit(s)/enterprises and hold the land on lease for a period of 50 years.

After the end of 50 years, the State Government reserves the right to review and

modify equity holding/ownership on mutually agreed terms and conditions.

State Government shall provide 99% Sales Tax (VAT) / Entry and Tax exemption to

eligible industrial units on import of actual raw materials, machineries and

equipment’s into Arunachal Pradesh as also on sale of finished goods in the State

for a period of 7 years from the date of commencement of commercial production.

At present Trading License are issued only to indigenous local traders. The present

policy wil also be applicable for small scale industries/enterprises.

However, under this policy the trading license wil be issued to all entrepreneurs

including outside investors for the industries/ enterprises which involve

investments of minimum Rs 5.00 Crore in plant and machineries, whereas in

case of service sector the minimum investment on equipment’s should not be

less than Rs.2.00 Crore to qualify for obtaining trading license.

The State Fiscal Incentives:

Price Preference: State Government Departments and other state Government

control ed bodies and organizations, while making purchases wil give price

preference to the products manufactured by registered Micro and Small

Enterprises. Other things being equal they wil be given a price preference in

contract bids as indicated below:

Type of Industries

Price preference rates

Cooperative Ventures

7.5 %

Cottage, Micro and Small Enterprises

7.5 %

Arunachal Pradesh State Industrial Policy 2001

The policy resolution is aimed to encourage the establishment of industrial

undertakings in the private and co-operative sectors for the sustainable

EASE OF DOING BUSINESS IN NORTH EAST

55

development of the state. Other thrust areas of the policy emphasised on creating

employment and self-employment opportunities in industrial and allied sectors.

It was decided that investors from outside the state wil be given 100 equity

ownership of an industrial unit by entrepreneurs for a maximum period of 30

years by the end of which period such equity holding wil be reduced to 49 per

cent and the remaining 51 per cent wil be held by local Arunachal tribal

entrepreneur or a group of local tribal entrepreneurs or the state govt. if it considers

necessary to do so. Outside entrepreneurs may be al owed to hold land on lease

for a period of 30 years which may be used as security for loans from financial

institutions.

According to the policy in the initial stages following industries will be

encouraged:

a. Industries based on agricultural, horticultural and plantation produce

b. Industries based on local y available raw materials

c. Textiles (handlooms and power looms) and handicrafts.

d. Electronics and knowledge based industries

e. Industries based on non-timber forest produce

f. Infrastructure such as power and communications

g. Tourism

h. Medical services

i. Educational services

Incentives designed for the industries

Al incentives granted by the central government shall be transmitted to eligible

entrepreneurs establishing industrial units in Arunachal Pradesh. Currently these

include:

• Central Capital Investments subsidy scheme

• Transport subsidy scheme

• Central interest subsidy scheme

• Comprehensive insurance scheme etc

Price preference

Government department and other government controlled bodies and

organizations, while making purchases wil give price preference to products

56

EASE OF DOING BUSINESS IN NORTH EAST

manufactured by registered SSI units. Other things being equal they wil be given

a price preference in contract bids as indicated below:

Sr. No. Type of Industries

Price preference rates

1

Cooperative Ventures

7.5%

2

SSI Units, cottage and tiny units

15%

Administrative Measures

A State level industrial empowered committee comprising of the concerned

secretaries and representatives from banking and financial institutions wil be

formed to grant the requisite clearances and facilitate the establishment of

industries from a single window. This empowered committee is headed by the

Ministers of Industries. Each district industries centres has udyogsahayak cell to

guide entrepreneurs in the setting up of the industries by selection of product,

preparation of project report and arrangement of finance for the project. There is

also women’s centre to cater to the special needs of women entrepreneurs. The

district level industrial advisory boards is reconstituted for monitoring the working

of the district industries centres. Rural Non-Farm Sector has identified 10 sectors

for development, which includes sectors like Agriculture, Fish rearing and

processing, Rural retail Trade, Sericulture and Silk textile fibre products,

construction, smal plantations products, handloom, handicrafts products in cane

and bamboo and wood. These activities are to be developed for creation of

additional employment in the rural areas. Al relevant departments wil be

associated in the implementation of these schemes. A package for the revival of

sick industries in the SSI and Tiny sector is also devised. Other initiatives under

the policy include public sector policy, women entrepreneurs, and registration of

SSI units. Under the registration of SSI units a single window service cell is set up

for assisting entrepreneurs to get al required technical clearances, guidance etc,

for undertaking any industrial project or activity in the district in the district. Units fulfil ing all formalities of registration wil be given provisional or permanent

registration wil be given provisional or permanent registration by the district

industries centres/directorate of industries. Registered SSI units is exempted from

furnishing security deposits or earnest money. Quality control for purchase of

testing equipment’s 50% subsidy is admissible to the SSI and tiny industries.

Registration fee and annual fee with the Bureau of Indian Standards etc. is

reimbursed in ful for the first five years. The departments of industries is the

Nodal Agency for quality control of al industrial products in the state.

EASE OF DOING BUSINESS IN NORTH EAST

57

Area and Population

Area

83.743 Sq Km

Population

8.64 lakhs (1991 Census)

Administrative Set-up

District

15

Sub-division

36

Circle

149

Industry

Medium Industries

17

Smal Scale Industries

2626

District Industries Centre/Sub-DIC

13

Craft Centre/Weaving/Knitting Centre

76

Sericulture Demonstration Centre

25

Govt. Emporia

17

Power Availability

Hydro

39.52 W

Procurement Preference Policy, Assam, 2015

In 2006 a Central Act viz Micro, Small and Medium Enterprises Development Act,

2006 (MSMED Act, 2006) came into force.

Section 11 of the Act lays down that in order facilitate promotion and development

of micro and small enterprises, the Central Government or the State Government

may, by order notify from time to time, preference policies in respect of procurement of goods and services, produced and provided by micro and smal enterprises,

by its Ministries or departments, as the case may be, or its aided institutions an public sector enterprises”.

Assam Preferential Stores Purchase (APSP) Act 1989 does not match with the

provision of Micro Small and Medium Enterprise (IVISME) Development Act, 2006

and other relevant’ institutions of the Central/State Government like CVC. Whereas

it has become expedient and necessary to encourage growth of enterprises in

the State of Assam and promotion, development and enhancement of

competitiveness thereof especial y for Micro and Small Enterprises.

58

EASE OF DOING BUSINESS IN NORTH EAST

The Legal Framework

Section 11 (under chapter IV) of MSME Development Act, 2006 empowers the

state Government to resort to preferential procurement vis-a’-vis the principles of

the public procurement and AFR_BM Act and other extant rules /guidelines.

Objectives:

• To facilitate growth of Micro and Small Enterprises, to provide opportunity

to local entrepreneurial talents and to maximize avenues for employment

generation

• Increased participation by Micro and Smal Enterprises in the State

Government Stores Purchase programme.

• Enhancement of competitiveness amongst the Micro and Small

Enterprises.

• Encourage linkages between Micro &. Smal Enterprises and Large

Enterprises.

Registration for getting preference under the Policy:

Any MSE who has obtained an EM Part-I from the District Industries & Commerce

Centre shall be eligible for registration under the Policy. Registration shall be

valid for 2 (Two) years and wil be reviewed and renewed after every 2 (Two)

years by verifying continuous commercial and technical competence of the

registered Micro and Small Enterprises. The General Manager, DI&CC wil issue

Registration Certificate under the Policy.

Such units shall be called enterprises registered under Procurement Preference

Policy (PPP) and when such units supply/ intend to supply goods or render services

to State Government offices/ Corporations/ PSUs etc they shal be cal ed suppliers

which shal also include ASIDC. Such certificate issued by General Manager,

District Industries & Commerce Centre wil clearly indicate name Of the MSE,

name of owner(s) of WISE, name of street, town/vil age, contact email address,

phone No., items for which registered, capacity of production and sales turn over

as per balance sheet of previous years. The certificate should also include the

dates of issuance and supply.

Preference

i) MSEs registered under the Policy and falling in Schedule -1 areas wil be

entitled for price preference upto 20% over the Li price if LI happens to be

Non-registered industry/ supplier under this policy. In case more than

one such unit qualifies for price preference, then the lowest quoted rate

EASE OF DOING BUSINESS IN NORTH EAST

59

by the MSE registered under the policy and falling in Schedule-1 wil be

considered and supply order shal be given to such enterprise.

i ) MSEs registered under the Policy and falling in Schedule-2 areas wil be

entitled for price preference upto 15% over the Li price if Ll happens to be

Non-registered industry/ supplier under the policy. In case more than one

such unit qualifies for price preference, then the lowest quoted rate by the

MSE registered under the policy wil be considered and supply order shal

be given to such enterprise.

i i) MSEs registered under the Policy and falling in Schedule-1 areas wil be

entitled for price preference upto 10% over the Li pried if Li happens. to be

PPP registered MSEs and located in Schedule-2 area. In case more than

one such unit qualities for price preference, then the lowest quoted rate

by the MSE registered under the policy and falling in Schedule-1 areas wil

be considered and supply order shal be given to such enterprise.

However, in all the above 3 (three) categories, such preferential

procurement wil be restricted to 25% of the tender value in al the cases

and the rest 75% of the tender value wil be allowed to L1.

iv) In case of MSEs registered under the policy and fal ing in Schedule-1 area

and IVISEs registered under the policy and fal ing in Schedule-2 area qualify

for supply of goods where Li happens to be a Non-registered industry/

supplier under this policy, then the supply wil be distributed as below:

(a) MSEs registered under the policy located in Schedule-1 area: 12.50%

(b) MSEs registered under the policy located in Schedule-2 area: 12.50%

(c) Non-registered industry/ supplier quoting Ll: 75.00%

Il ustration is at Annexure-A1 to A4

Tendering& Procurement

(i) Al purchases above Rs.5.00 Lakh (Rupees Five Lakh) should be done by OPEN

TENDER under this policy by the respective departments themselves.

(i ) If any purchasing department so desires, it can appoint ASIDC as its official

tendering agency as per terms and conditions agreed upon by the purchasing

department and ASIDC.

Purchasing department, if so desires, can also appoint ASIDC as its procuring

agency as per terms and conditions agreed upon by the purchasing department

and ASIDC.

60

EASE OF DOING BUSINESS IN NORTH EAST

Rate Contract

ASIDC shall conclude rate contracts with the registered suppliers for goods and

items of standard types which are identified as common user items and are

needed on recurring basis by various State Government Departments/ State

PSUs/ its aided institutions.

Detailed operational modalities along with items to be considered for such rate

contract wil be finalized by ASIDC within 3 (three) months of the notification of the

Policy with the approval of Commissioner of Industries.

Marketing Syndication and MSEs Consortium

ASIDC shal also act as a representative consortium on behalf of the PPP registered

MSEs to procure and supply goods/ services to State Government offices/ its

aided institutions/ Public Sector Undertakings for which it (ASIDC) shal qualify for

the fol owing benefits.

(a) Issue of tender sets free of cost.

(b) Exemption from payment of Earnest Money.

(c) Waiver of Security Deposit.

For such services rendered to PPP registered MSEs under the consortium, with

the consent of MSEs, upto one percent of. the value of supply order would be

charged by ASIDC as “Service Charges” from the MSE supplier if any such supply

order is bagged by MSEs under ASIDC’s consortium.

Developing Micro and Smal Enterprise vendors

ASIDC shal also act as a Nodal Agency for development of Micro & Smal

Enterprises in the State and take necessary steps to develop appropriate vendors

organising Vendor Development Programmes/ Buyer-Sel er Meets for the

development of Micro & Small Enterprise in the state. Further, for development of

Micro and Small Enterprises of Schedule Caste, Schedule Tribe and women:-

a) Special Vendor Development Programmes/ Buyer-Sel er Meets shall be

conducted for Scheduled Castes or Scheduled Tribes including that of

women.

b) Outreach programmes shal be conducted by ASIDC to cover more and

more Micro and Small Enterprises from Scheduled Castes or Scheduled

Tribes.

For the purpose of the same State Government shall make a separate budget

provision for ASIDC to carry out the works.

EASE OF DOING BUSINESS IN NORTH EAST

61

Payment

Payment for purchase would be made by the purchasing department directly to

the supplier which shall also include ASIDC, in case the supplier is ASIDC.

Quality

Quality of the items shall be as per purchasers’ specification. Quality certification

may be obtained from the Quality Control Laboratories under the Industries &

Commerce Department, Assam, any other Central/State. Government authorized

institution/agency.

Annual Plan for Procurement from Micro and Small Enterprises

The State Government Departments/ State I5SU/ State Govt. aided institutions

shall also prepare Annual Procurement Plan for purchases within 30th June

every year and upload the same on their official website and also submit the

same to ASIDC to upload the departmental Annual Procurement Plan in the

Corporation’s website so that Micro and Smal Enterprises may get advance

information about requirement of procurement.

Applicability and Compliance

The ProcurementPreference Policy of MSEs shall be statutory under section 11 of

Micro, Smal Medium Enterprises Development Act, 2006 and mandatory for all

State Government offices, its aided institutions, Public Sector Undertaking.

Review Committee

There shal be a Review and Monitoring Committee headed by the senior most

Secretary, Industries & Commerce Department, Assam for ensuring proper

implementation of the Policy. The Industries & Commerce Department, Assam

wil notify the Committee along with the terms of reference.

Notification of Schedule-I & I

Industries & Commerce Department, Government of Assam wil notify Schedule-

I & I from time to time.

Removal of difficulty

Any difficulties experienced during the course of implementation of the above

Policy shall be clarified by Government of Assam, Industries & Commerce

Department.

62

EASE OF DOING BUSINESS IN NORTH EAST

NORTH EAST INDUSTRIAL AND INVESTMENT PROMOTION POLICY (NEI PP),

2007

Overview

The northeast Industrial Policy (NEIP), 1997 announced on 24.12.1997 covered

the states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram,

Nagaland and Tripura. Under NEIIPP, 2007 Sikkim will also be included.

Consequently the New Industrial Policy and other concessions for the state of

Sikkim announced vide O.M N0.14 (2)/2002-SPS dated 23/12/2002 and the

schemes thereunder i.e. central capital investment subsidy scheme, 2002, central

interest subsidy scheme, 2002 and central comprehensive insurance scheme,

2002, notified vide notifications No. F.No 12 (2)/2002- SPS dated the 24-12-2002

wil be discontinued from 1.4.2007.

Duration

Al new units as wel as existing units which go in for substantial expansion,

unless otherwise specified and which commence commercial production within

the 10 year period from the date of notification of NEIPP, 2007 wil be eligible for

incentives for a period of ten years from the date of commencement of commercial

production.

Neutrality of Location

Incentives wil be available to all industrial units, new as well as existing units on

their substantial expansion, located anywhere in the North Eastern Region.

Consequently the distinction between ‘thrust’ and ‘non-thrust’ industries made in

NEIP, 1997 is discontinued from 1.4.2007.

Substantial expansion

Incentives on substantial expansion is given to units effecting ‘an increase by not

less than 25% in the value of fixed capital investment in plant and machinery for

the purpose of expansion of capacity/modernization and diversification’, as

against an increase by 331/2 % which was prescribed in NEIP, 1997.

Excise duty exemption

100% excise duty exemption is continued on finished products made in the North

Eastern Region. However in cases where the CENVAT paid on the raw materials

and intermediate products going into the production of finished products (other

than products which are otherwise exempt or subject to nil rate of duty) is higher

than the excise duties payable on the finished products.

EASE OF DOING BUSINESS IN NORTH EAST

63

Income tax exemption

100% Income Tax exemption wil continue under NEI P, 2007 as was available

under NEIP, 1997.

Capital Investment Subsidy

The subsidy is enhanced from 15% of the investments in plant and machinery to

30% and the limit for automatic approval of subsidy at this rate is Rs. 1.5 crores

per unit, as against Rs. 30 Lakhs as was available under NEIP, 1997. Such subsidy

wil be applicable to the units in the private sector, joint sector, co-operative

sector, as well as the units set up by the state governments of the North Eastern

Region. For grant of higher subsidy of maximum Rs. 30 crores, the decision wil

be taken by setting up an empowered committee. Proposals which are eligible

for subsidy higher than Rs. 30 crores, wil be placed by Department of Industrial

Policy and Promotion before the Union Cabinet for its consideration and approval.

Interest subsidy

Interest subsidy is made available @ 3% on working capital loan under NEI PP,

2007.

Comprehensive Insurance

New Industrial units as wel as the existing units on their substantial expansion

wil be eligible for reimbursement of 100% insurance premium.

Industries not eligible under the scheme

The fol owing industries are not eligible for benefits under NEI PP, 2007:-

• Al goods falling under chapter 24 of the first schedule to the Central

Excise Tariff Act, 195 (5 of 1986) which pertains to tobacco and manufactured

tobacco substitutes.

• Pan Masala as covered under Chapter 21 of the first schedule to the

Central Excise Tariff Act 1985 (5 of 1986).

• Plastic carry bags of less than 20 microns as specified by Ministry of

Environment and Forests Notification No. S.O 705 E dated 2.9.1999 and

S.O 698 E dated 17.6.2003.

• Goods fal ing under chapter 27 of the first schedule to the Central Excise

Tariff Act 1985, (5 of 1986) produced b petroleum oil or gas refineries.

Incentives for Service/Other Sector Industries

Incentives under NEI PP, 2007 wil be applicable to the fol owing service sector

activities/industries:-

64

EASE OF DOING BUSINESS IN NORTH EAST

• Service Sector

a. Hotels (not below two star category), adventure and leisure sports

including ropeways;

b. Medical and health services in the nature of nursing homes with a

minimum capacity of 25 beds and old age homes;

c. Vocational training institutes such as institutes for hotel management,

catering and food crafts, entrepreneurship development, nursing

and paramedical, civil aviation related training, fashion, design and

industrial training.

d. The tax benefits as is availed under section 80IC of the Income Tax

Act is extended to IT related training centres and IT hardware units.

• Biotechnology Industry wil be eligible for benefits under the scheme as

applicable to other industries.

• Power generating plants wil continue to get incentives as governed by

the provisions of Section 81A of the income tax act. In addition power

generating plants upto 10MW based on both conventional and non-

conventional sources wil also be eligible for capital investment subsidy,

interest subsidy and comprehensive insurance applicable under NEI PP,

2007.

Value Addition

In order to ensure genuine industrial activities in the North Eastern Region, benefits

under NEI PP, 2007 wil not be admissible to goods in respect of which only

peripheral activities like preservation during storage, cleaning operations, packing

repacking, labeling or re labeling, sorting, alteration of retail sale price etc. take

place.

Transport Subsidy Scheme

The transport subsidy scheme would continue beyond 31.3.2007, on the same

terms and conditions. However, an early evaluation of the scheme wil be carried

out with a view to introducing necessary safeguards to prevent possible leakages

and misuse.

Nodal Agency

The North East Industrial Development Finance Corporation (NEDFi) is acting as

nodal agency for disbursal of subsidies under NEI PP, 2007.

It was noted that industrial units which have commenced commercial production

on or before 31.3.2007 wil continue to get benefits/incentives under NEIP 1997.

EASE OF DOING BUSINESS IN NORTH EAST

65

CHAPTER V

EFFECTIVE IMPLEMENTATION OF THE STATE

POLICIES IN NORTH EASTERN REGION

Guidelines for Administration of Non-Lapsable Central Pool of

Resources

The North East has essentially depended on Central funding for development

works. Al the States in the NER are Special Category States whose Development

Plans are centrally financed on the basis of 90% Grant and 10% Loan. Further, the

Special Category States are al owed to use up to 20% of the Central Assistance for

Non-plan expenditure. Despite the fact that the per-capita plan outlays of the NE

States over a period of time have increased yet States stil rank significantly below

the national average in so far as the development of infrastructure is concerned.

In terms of per-capita, State Domestic Product or other development indices,

such as Power, Length of Roads or Hospital Beds, the North-East ranks wel

below the national average. Though the literacy levels are higher than the national

average, vocational training and entrepreneurial skil s remain weak areas. As

the benefits of economic development have yet to steadily accrue to the Region,

efforts have been initiated in this direction in the recent past through various

supportive measures.

In October 1996, the then Prime Minister announced “New Initiatives for North

Eastern Region” and stipulated that at least 10% of the Budget(s) of the Central

Ministries/Department wil be earmarked for the development of North Eastern

States. A preliminary exercise undertaken by the Planning Commission in

consultation with the various Ministries/Department revealed that the expenditure

on the North East by some Union Ministries during 1997-98 fell short of the

stipulated 10% of the GBS for that year. Planning Commission thereafter explored

the possibility of creating a Central Pool of Resources for the North East out of the

unspent amount of stipulated 10% of GBS to support infrastructure development

projects in the North East. Certain Departments (e.g. Atomic Energy, Ocean

Development) could be exempted, mainly for the reason that they might have

little direct involvement in the Region.

65

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EASE OF DOING BUSINESS IN NORTH EAST

Further, as part of the budget proposals 1998-99, it was announced that: “It has

been decided that al Central Ministries/Departments should earmark at least

10% of their budget for specific programme of development in the North Eastern

Region.

The broad objective of the Non-lapsable Central Pool of Resources scheme is to

ensure speedy development of infrastructure in the North Eastern Region by

increasing the flow of budgetary financing for new infrastructure projects/schemes

in the Region. Both physical and social infrastructure sectors such as Irrigation

and Flood Control, Power, Roads and Bridges, Education, Health, Water Supply

and Sanitation - are considered for providing support under the Central Pool, with

projects in physical infrastructure sector receiving priority. States may identify

certain sectors for focused investments with a long-term vision instead of

expending these funds into smal , diverse and stand-alone projects. The State

should also indicate that these projects have not been taken up or proposed to be

taken up with any other funding mechanism. Projects in backward areas/ Sixth

Schedule areas/ Autonomous District Councils of the State would continue to be

accorded weightage. While posing projects for funding under NLCPR in a particular

financial year, the States may include projects from backward areas/ Sixth

Schedule Areas/ Autonomous District Councils in the priority list of projects for a

particular financial year minimum upto 25% of total cost of projects included in

the priority list for that year. Along with Priority List, the Concept Paper for each

project included in it should be submitted denoting approximate financial outlay

benefits accruing from such projects, identification of beneficiaries etc. Concept

Papers must be prepared as per the generic structure. They must clearly indicate

a detailed analysis of the existing facilities in the sector and ful justification for

retention of the particular project. The Concept Paper must invariably delineate

the cost-benefit analysis of the project. For economic sector project economic

benefit should specifical y be indicated comparing it with the cost involved. The

concept paper should inter-alia include a certificate that the project have not

been taken up or proposed to be taken up with any other funding mechanism.

Government of India norms for projects and for the sector to which the project

belongs should invariably be kept in mind while proposing a project. Only the

infrastructure development projects that may lead to socio economic upliftment

in the State and having impact on larger number of people should be included in

the list. No individual beneficiary schemes / projects should be included in the

Priority List. For optimum utilisation of funds, the States may propose the projects

on the basis of present needs and keeping view the future expansions rather

than making imaginary proposals. Projects with an estimated cost of only Rs.3.00

crore or above should be included in the priority list. If a project in the priority list is considered by the NLCPR Committee but not retained, then it may not be

proposed again at-least for next three (3) years.

EASE OF DOING BUSINESS IN NORTH EAST

67

The cost indicated in the Concept Paper should be on realistic side and based on

latest SOR. The cost escalation while final y sanctioning the project is al owed

only to the extent of 10-15 % over the cost indicated in the Concept Paper. Under

exceptional circumstances this limit can be extended up to 20% beyond which

the project wil stand chances of being dropped or the State Government wil be

required to comment and fund the enhanced cost. The scope of the project

indicated in the Concept Paper should be what is intended to be reflected in the

DPR. There should not be any major change in scope of project in DPR against

what was proposed in the Concept Paper.

Project Identification Plan

Fol owing criteria would further guide the project identification exercise by the

NLCPR Committee:

a. Projects of less than Rs.3 Crore would not be general y funded;

b. NLCPR funds wil not be used to fund land acquisition costs;

c. Each location specific project would be counted as one; the practice of

clubbing many projects into one to increase the size of the project would

not be acceptable;

d. Project acceptance would depend on its soundness. The State priority list

wil only be a suggestive guide. NLCPR Committee wil not be bound by

that priority.

e. Projects in backward areas/ Sixth Schedule areas/ Autonomous District

Councils of the State would be given weightage and minimum 25% funds

may be al ocated to the projects falling in these areas.

f. NLCPR funds would not be used to substitute a budgeted ongoing project

or scheme. Emphasis need to be given for employment generation and

infrastructure schemes.

g. Normally project duration should not exceed maximum 3-4 years. Long

gestation projects wil not be encouraged;

h. Funding under NLCPR would be made available to State/Central agencies

only. The State however, may decide to get the project implemented

through any qualified, reputed, experienced agency to be specified in the

proposal.

Project Implementation Plan

a) The Detailed Project Reports (DPRs) would be prepared properly by the

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EASE OF DOING BUSINESS IN NORTH EAST

State Department concerned as per generic structure, based on the current

schedule of rates and submitted to the Ministry of DoNER, in five (5) copies,

through Nodal Department of the State within two months of retention of

projects. If the State Government could not submit DPR of the project within

two (2) months of its retention the project may be dropped.

b) To avoid the repetition of mistakes while preparing DPRs, the State

Governments should refer to the comments provided earlier by the Line

Ministries/ Ministry of DoNER for improvement in the DPRs of similar type

of projects.

c) Al regulatory and statutory clearances like forest & environment, land

acquisition etc. should be identified and timeframe for obtaining the same

has to be indicated.

d) The DPR should be accompanied by a socio-economic feasibility report

and must establish its economic and technical viability such as its rationale,

cost, finances available from other sources, similar facilities available in

and around area of the project site, detailed technical specifications etc.

• CPM and PERT chart;

• Year-wise phasing of inputs, viz. expenditure;

• Quarterly and yearwise physical outputs/targets to be achieved (as

project monitoring indicators);

• Project Implementation Schedule (Annexure I I);

• An authentication by State Authorities (not below the level of Chief

Engineer equivalent) that the costs are based on the latest Schedules

in vogue in the State concerned;

• Al relevant regulatory and statutory clearances and time frame for

obtaining the same.

Appraisal of Project Proposals

The Member Secretary wil place the shelf of priority project proposals before the

NLCPR Committee. The Committee in the first instance would identify the projects

out of the shelf, which can be considered for funding based on the soundness of

the proposal for further detailed examination. If required prior consultation may

be made with State Government officers/ Chief Secretaries. Al Recommendations

of the NLCPR Committee would be placed before Minister, Ministry of Development

of North Eastern Region for his approval before being communicated to the States

for submission of DPRs.The exercise of retention of projects may be completed

EASE OF DOING BUSINESS IN NORTH EAST

69

within one month of submission of Priority Lists by State Governments. The

complete and proper DPRs of the retained projects received from the State

Governments would be examined from technical and economic angle by the

Technical Wing of the Ministry/ Central Ministries concerned/ CPSU selected for

the purpose. The Technical Wing of the Ministry/ Central Ministries concerned/

CPSU wil offer their comments on the DPR within 15 days and final comments

within one month of receipt of DPR. The comments of the Technical Wing of the

Ministry/ Central Ministries concerned/ CPSU selected for the purpose would be

conveyed immediately to the State Governments. Similarly the State Government

ful y complying with the comments of the Ministry should send back the DPR/

revised DPR along with compliance report within 15 days from the receipt of the

comments of the Ministry. If required the Ministry may invite officers of the State

Government for clarifications. To avoid duplication of projects the DPRs may be

sent to Planning Commission and Central Ministries concerned to obtain their

comments within a definite time frame of one month about duplicity in funding of

projects. If no comments received within one month, the Planning Commission

and Central Ministries concerned may be deemed to have no objection in funding

the project under NLCPR and DoNER may proceed for according sanction.

Project proposals techno-economically cleared by the Technical Wing of the

Ministry/ Central Ministries concerned/ CPSU selected for the purpose would be

put up before the NLCPR Committee for final approval. This process would be

completed within two months of the receipt of complete and proper DPR in the

Ministry from the State Government.

Concurrence of the Minister DONER would be obtained before according final

approval for the projects to be funded under NLCPR.

Cost Escalation

The proposal relating to escalation in cost of the sanctioned projects for any

reason general y does not qualify for consideration under the Non-lapsable Central

Pool of Resources. However, in some deserving cases, if the enhancement of the

cost is due to change in scope of the works that was not envisaged at initial stage,

the proposal wil be submitted to the NLCPR Committee at the appropriate juncture

for consideration. In cases where the increase in cost is not due to change in

scope, and felt to be justified due to factors beyond the control of the executing

agency, NLCPR Committee wil take a view provided that in such cases in overall

terms the escalation does not exceed 20% of the original y approved cost.

Financing of such increased cost may be permitted on the basis of sharing

between the Nonlapsable Central Pool of Resources and the State Government

in the ratio of 1:1.

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EASE OF DOING BUSINESS IN NORTH EAST

Project Implementation by the State Government

Once the project is approved by the Ministry of DoNER the State Government

should ensure that the tender has been called on competitive basis by giving

wide publicity in print media & website etc. and the works have been awarded

within three months of its sanction, even without waiting for the release of funds

from State Government to implementing agency.

The State Government should fol ow al codal formalities and strictly adhere to

the project implementation schedule and physical targets given in the DPR.

State Government may give preference to Local Bodies for implementation of the

projects if they are qualified under tendering/ financial rules fol owed by them.

Any project which could not be completed within target date (as given in DPR by

the State Government) plus six months, it wil be closed for funding by M/o

DoNER. The State Government wil be responsible for completion of the balance

work in the project from its own resources.

In case during implementation of project State Government wants to increase/

change the completion schedule of the project, it may be done at the level of State

Chief Secretary by holding a meeting and the revised date of completion so

finalized may be conveyed to Ministry of DoNER with specific reasons well before

the expiry of six months period after the original/actual date of completion.

Release of Funds

Once the proposal is approved for support by the Ministry of DoNER the funds

would be released in three installments comprising of 40%, 40% and 20% of the

approved project support/cost unless there are special circumstances which

would be clearly brought out in the proposal for release.

The NLCPR division through the Joint Secretary concerned shal obtain the

concurrence of Internal Finance Division of the Ministry for releasing installments.

The funds would be released/ sanctioned to the State Government in the form of

90:10. 90% of the approved cost would be released by the M/DoNER as Grant.

Balance 10% being State share would be contributed by the State Government.

As regards the disbursements, if any for projects of Union Ministries/Departments,

it shall be made from the Central Pool to the department/ministry in form of

supplementary demand for grants.

Release of funds for ongoing projects: The 2nd installment wil be released only

on completion of 40% of the project and submission of utilization certificate of at

least 80% of funds released in 1st instal ment. The subsequent installments shall

depend upon the progress - both in financial and physical terms – of the

EASE OF DOING BUSINESS IN NORTH EAST

71

implementation of the project subject to 80% utilization of funds of last release,

and ful utilisation of all prior releases, if any, and achieving commensurate

physical progress.

Request for release of subsequent installments of funds submitted by the State

must be accompanied with:

• Utilization Certificates (UCs)

• Quarterly Progress Reports (QPRs)

• Photographs of the works completed

• Work plan for the requisitioned amount with milestones and time frame

• Inspection report of Nodal officer indicating the physical & financial

progress of the project, etc.

UCs shall be submitted in the prescribed proforma (Annexure IV) only when the

expenditure on the project has been incurred by the implementing agency.

Planning Secretary on behalf of the State and, in case of a Union Ministry, an

officer not below the rank of Joint Secretary, should sign the UCs.

Release of further installments shal be recommended only after receipt of UCs

and QPRs and other mandatory documents.

Funds released from the Pool must be transmitted to the implementing agency/

project authority (such as PWD, Housing Corporation, State Electricity Board, etc.)

by the State Government within 15 days from the date of release of funds from

Government of India and a certificate to this effect be sent to Ministry of

Development of North Eastern Region by the State Planning Department.

Funds released by the Government of India must be utilized within a period of 12

months from the date of release. In case the funds are not utilized within the

stipulated time, such cases may be referred to the Ministry of Development of

North Eastern Region with sound reasoning for revalidation. Revalidation for a

limited period may be granted by Secretary of Ministry of DONER on merit.

Monitoring & Evaluation

The State and Union Ministries/Departments shall report the progress inrespect

of each project at the end of the quarter on the proforma (QPR)prescribed for this

purpose at Annexure V. Any additional information may befurnished along with

the format. Such QPRs should reach the Joint Secretary ofthe Ministry within three

weeks of the end of the quarter under report.

Chief Secretary of the State shall hold quarterly meeting to review the progress of

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EASE OF DOING BUSINESS IN NORTH EAST

implementation of the ongoing projects under NLCPR and make available

summary record of such meetings to the Ministry of DONER.

State wil carry out project inspection periodically. The quarterly review report of

the State would contain a separate and distinct section on the findings of the

project inspection. In case of NLCPR projects implemented by Central Government

agencies, such inspections may be conducted by their competent authority and

reports wil be submitted to the Ministry under intimation to concerned State

Government.

State would nominate a ‘nodal officer’ for each project who would be responsible

for project implementation and monitoring.

Monitoring and evaluation of implementation of the project shal also be

undertaken through field inspections by officers of the Ministry of DONER, as wel

as through impact studies, social audits and evaluations conducted by government

or through independent agencies at the request of the Ministry (DONER).

Each State would ensure that the projects being funded under NLCPR are shown

at Major-head to sub-head level in their plan budgets so that withdrawals from

those heads as certified by audit can be matched with expenditure figures supplied

by State for each project.

The State Government would ensure that the data entry of the progress of the

project starting from the submission of the priority list by the State Government

upto the completion of the project shal be made by the designated officials of the

State Government on the online data entry Management Information System

(MIS) already in vogue

The Ministry should also review of implementation of projects with State

Governments through video conference at the level of Joint Secretary.

Transparency and Publicity of Information

In order to ensure that the information about developmental schemes being

financed through the Non-lapsable Central Pool of Resources reaches the ultimate

beneficiaries, i.e. the targeted beneficiaries, there is a need to ensure greater

transparency and publicity of information. For this purpose, the fol owing shal be

ensured:

(i) Al the schemes/projects being supported from the Central Pool shall be

given wide publicity in local media.

(i ) Immediately after project approval is received, the State Government shall

display at project site a board indicating the date of sanction of the project,

EASE OF DOING BUSINESS IN NORTH EAST

73

likely date of completion, estimated cost of the project, source of funding

i.e. Non-lapsable Central Pool of Resources (Government of India),

contractor(s) name and the physical Target after completion of projects,

State Government wil put a permanent display on site like plaque on the

wall etc. after asset is created displaying details of NLCPR funding.

(i i) State Government shall disseminate information through media, print,

electronic, through appropriate means on the schemes being implemented

from the Central Pool.

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EASE OF DOING BUSINESS IN NORTH EAST

Chapter VI

Impact of GST on Ease of Doing Business

in North Eastern Region

Prelude

GST stands for “Goods and Services Tax”, and is proposed to be a comprehensive

indirect tax levy on manufacture, sale and consumption of goods as well as

services at the national level. It wil replace all indirect taxes levied on goods and

services by the Indian Central and State governments. The main expectation

from GST is to abolish all indirect taxes and only GST would be levied. As the

name suggests, the GST wil be levied both on Goods and Services.

GST is expected to provide fil ip to the country’s exports and fast track process for

refund of duties and taxes to exporters. Employment generation is also expected

to gain pace.

How is GST applied?

GST is a consumption based tax/levy. It is based on the “Destination principle.”

GST is applied on goods and services at the place where the final consumption

takes place. GST is col ected on value-added goods and services at each stage

of sale or purchase in the supply chain. Being the last person in the supply chain,

the end consumer has to bear this tax and so, in many respects, GST is like a last-

point retail tax and wil be col ected at point of Sale. The incidence of double

taxation wil be removed and there wil be no cascading effect of multiple levies.

How Northeast wil benefit through GST?

GST wil convert India into one unified market and wil bring uniformity to the tax

structure and wil also bring about transparency. As already mentioned above,

this move is crucial to improve ease of doing business in India and address the

ambiguities of the current indirect tax landscape, proving beneficial for the

economy, at large.

It can facilitate seamless movement of goods across inter-state borders enabling

better efficiency and spurring growth of the (eCommerce) sector. With various

74

EASE OF DOING BUSINESS IN NORTH EAST

75

start ups being initiated in the Northeastern region, the upcoming entrepreneurs

wil get a boost to their start-ups.

Riddhinil Roy, founder and CEO of NE8 Start ups, an initiative that provides a

platform for budding entrepreneurs opines, “The GST is more than a boon in

disguise as wel as in practicality for aspiring entrepreneurs from the country,

considering the demography of Northeast India as wel . While the benefits includes

ease of starting business and most importantly higher exemptions to new

businesses, reforms wil include, simple taxation which wil be a game changer

especial y in reduction in logistics cost and time across Northeast Indian states,

so that the connectivity between the states is improved thereby developing the

economy and contributing towards the nation’s growth.”

It may be noted that although luxury cars, FMCG products, consumer durables,

electronics items and readymade garments wil become cheaper once GST is

rol ed out next year, but mobile phones, banking and insurance services, telephone

bil s as wel as air travel wil be dearer due to higher tax.

Hence while the luxurious community may be in for some good news, the North-

eastern students studying outside the region may be in for some disappointment.

But for goods which currently attract low rate of duty like small cars (excise duty of

8 per cent), the impact of GST wil bring about a price hike. However, for SUVs and

big cars that attracts excise duty of 27-30 per cent, wil see a marked drop in

prices. Hence the dream of owning an SUV might soon come true for people of

the region.

Again, the effective rate of tax for cement companies is now 25%. If GST rates are

fixed at 18-20% then the overall tax incidence wil be lower GST IS expected to

lead to savings in transportation cost, which currently comprises up to 20-25% of

total revenue. One common market wil bring down the number of depots in the

country. With various cement manufacturing units coming up in the region, this

comes as some respite.

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EASE OF DOING BUSINESS IN NORTH EAST

Source: The North East Today

However, the investors in the region are in for some bad news as they wil have

to shel out more for buying mutual fund products after the implementation Goods

and Services Tax (GST) as investment in mutual funds wil become costlier by 3

per cent.

Another grey area is that companies rushing to establish manufacturing units in

far-flung states to take advantage of tax benefits may have to look for other

avenues. The Central Government is unlikely to provide further extension to the

ten year excise duty holiday scheme which has been extended once for states in

North-East, Uttarakhand, Himachal Pradesh, Jammu & Kashmir. The purpose of

launching the scheme was to develop the economies of the aforesaid states and

create employment opportunities. Now the mentioned tax sop may not be

extended as it could pose inconveniences when Goods and Services Tax (GST)

wil final y come into existence.

The Bil wil , however boost the ‘Make in India’ plan and might make the

Northeastern region self-sufficient in various economic domains considering the

fact that various states in the region shares its borders with foreign nations and

trade relations may improve. To sum up, it can be said that GST wil alter the

present system of production-based taxation to a consumption-based one.

Further, one of the biggest advantage the northeast wil avail through Goods and

Services Tax (GST) is the elimination of bribery and corruption and check the role

of tol post. The rol out of GST from 1st of July, 2017 wil bring substantial succor to

EASE OF DOING BUSINESS IN NORTH EAST

77

the poor and lower middle class by resulting in a tax rate lower than the present

tax rate.

The Central Government would compensate GST related revenue loss to the

states for the first five years. For the eight north eastern states and the three hil y

states, incentives like, tax exemptions provided to industries by states wil also

be counted in the computation of revenue loss.

The Central Government is also taking cognizance of the internet-connectivity

issues in Northeast and so numerous convenient alternatives are being worked

for smooth rol out of GST in the region.

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EASE OF DOING BUSINESS IN NORTH EAST

Epilogue

The infrastructure scenario of North Eastern States is showing an improving trend.

Soft infrastructures such as, healthcare and education is also progressing and

there is an overall growth of the region. With the rise in entrepreneurship it is on

way of becoming ‘ Engine of India’s new economy’. There is huge growth potential

in hydel power, cottage industry, tourism, textiles, handicrafts, sericulture, Oil & Gas based industry, apparel and garmenting etc.

India’s trade relations with its immediate contiguous countries in South Asia have

gained special focus for the government, with a larger goal of building regional

value chains in varied sectors like, textiles, engineering goods, chemicals,

pharmaceuticals, auto components, plastic and leather products. An added

advantage of such integration wil be an enhanced role for North East India in

regional trade with its consequent development results. A better connected South

Asia can offer additional trade routes to South East Asia and Central Asia.

Moreover, the approach named ASIDE (Assistance to States for Developing Export

Infrastructure and Al ied Activities) Scheme which proposes implementation on a

50:50 basis for all States and on 80:20 basis for Hil and North Eastern States.

It is interesting to note that the connectivity of North East with the rest of country

in terms of road, rail, air, telecom, power and waterways is improving. While

addressing a joint sitting of Parliament, Shri Pranab Mukherjee, Honorable

President of India said that India is opening up road and rail routes to adjoining

countries to provide an impetus to the economic development of North East.

Some of these notable developments are harbinger of tremendous growth

potential of India’s incredible North East- Putting Arunachal Pradesh and

Meghalaya on the rail map; Connecting Agartala, Tripura with broad guage line;

Approval of North-East BPO scheme in the Digital India program; Mega projects

of The Brahmaputra Cracker and Polymer Limited and Numaligarh Refinery Limited

etc. In order to strengthen employment opportunities in the northeast, the

Commerce & Industry Ministry and NITI Aayog are in talks with the north-eastern

states to soon come out with a new North East Industrial & Investment Promotion

Policy (NEI PP).

Thus, northeast is al set to fly high on the firmament of endless business

opportunities.

EASE OF DOING BUSINESS IN NORTH EAST

79

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EASE OF DOING BUSINESS IN NORTH EAST

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NOTES

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EASE OF DOING BUSINESS IN NORTH EAST

NOTES

Document Outline

1-6.pdf

1-82.pdf