Paradigm for Investments in Assam

Tuesday, 18 December 2018

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Paradigm for Investments in Assam

Dwaipayan Bora | February 09, 2018 17:23 hrs


Assam government’s investment pitch and organization of Global Investor’s Summit is heartening. One has to wait to see how it fructifies. A pertinent question that emerges is - what attracts investments? Across the world it is observed that investments are drawn to locations developed as industry clusters - places that increase productivity, stimulate innovation and enhance competitiveness while making a product. In India too, Special Economic Zones and science-based industry (like IT, Biotech, Plastic, Food) parks have the industrial cluster phenomenon embedded within it. To maximize success, clusters have to leverage local strengths, pool resources, share risks, grow a trained workforce, connect with local universities / institutions, provide incentives and encourage self-organization. US’s Silicon Valley, London’s financial district, Costa Rica’s ecotourism, Malaysia’s palm oil industry are some successful clusters. To optimize use of available resources and its skilled manpower, similar clusters based on merits need to be developed in Assam. Five areas having maximum potential for development as clusters that can turnaround the state’s economy are described below:

 

Furniture and home furnishing products 

 

Statista, the statistics portal states that global furniture and home furnishing market will be $182 billion with 700 million users in 2018. India’s share in this global market will be a paltry $1.4 billion (or 0.78%), with 83.4 million users. Assam is blessed with abundant natural building materials - wood, bamboo, water hyacinth and jute.  To take its full advantage, a cluster that delivers affordable high quality furniture and home furnishing products, efficient in function and design can be developed. A new product - wood plastic composite - is gaining popularity due to its strength and low cost. Assam has an advantage in this as its basic constituents - polypropylene (also produced by BCPL) and wood fibres from sawmill waste – are readily available here. 
This cluster should harness investments and knowledge base for workers to aid in designing, sourcing, packing and distributing these products. Policies for protecting ecosystem and people’s livelihoods for sustainable and natural harvesting of these materials should be evolved. 

 

Fishery and fish products


FAO FishStat database estimates that freshwater fish comprises about 30% of all fish and sea food production in the world. 5% of global fishery production originates from India, while Myanmar’s, Vietnam’s and Bangladesh’s shares are about 4%, 3% and 1.6% respectively (2014 data). Assam’s geographical position with its numerous freshwater bodies indicates it’s potential. With the right policies and marketing these can be developed as cluster of sustainable fish producers, frozen food processors, packers and exporters of fish products.

 

New regulations, quality control, packaging procedures should meet USFDA requirements and EU directives concerning production and export of frozen fish, fresh and chilled fish, frozen fillets and steaks, salted and dehydrated fish, frozen shrimp, dry fish, live crabs and tortoises. Global demand of Fish oil is increasing - Americans spend about $15 billion a year on it or other such supplements for improving mental health. This cluster should also target this potential.

 

Horticulture, floriculture, plant nurseries

 

Flowers and lush foliage of ornamental plants are in high demand across the world. With right inputs, Assam can become a honey pot for adventurous gardeners. Care should be taken not to introduce plant species outside its native range called invasive species that might affect the natural ecosystem. However these can be scientifically introduced thereby increasing local biodiversity. Thus this cluster requires thorough research on plant biology. International demand has rapidly expanded for ornamental plants - Cut flowers, flowering pot plants, tree and nursery crops and flower bulbs. Total US floriculture and nursery consumer expenditure was over $31 billion in 2015 (US Bureau of Economic Analysis report). In 2015 the Dutch share in world’s cut flower export was 43% (Rabobank, 2016). However, for the first time—Colombia, Kenya, Ecuador and Ethiopia— attributed as the four rising flower stars have surpassed Holland’s share in 2015 and accounted for 44% exports.  Air freight is expensive and relatively unsustainable. At this time, companies are exploring opportunities to spread into other markets and/or sourcing countries/regions and adopt more sustainable supply chains, and here lies an opportunity for Assam. 

 

Earthquake resistant construction engineering

 

A major earthquake in high seismic risk cities including Mumbai, Dhaka and Kolkata (UN 1999) or Guwahati could cause major devastation and a significant number of deaths. Recent earthquakes have revealed that so-called modern building construction practices are not necessarily safe. EERI’s and IAEE’s World Housing Encyclopaedia reports describe the same vulnerable features and poor performance in earthquakes all over the world. Assam and the neighbouring region are rich in limestone reserves, which have attracted the cement industry. India is the second largest cement producer in the world with $5.24 billion FDI between 2000 and 2017 (DIPP data). India’s eastern states are likely to be new markets for cement companies due to the infrastructure push in this region. At this time, Assam should build a cluster for Earthquake resistant construction engineering for developing cost effective safe designs, products and services to meet similar challenges across the world.

 

Tea value-chain

 

In spite of being a global producer of quality tea for a long time, Assam has not been able to develop other products of the tea value-chain. It is necessary to move down the value-chain to extract maximum economic advantage of this commodity which has a great brand value. Investments are required for tea blending and packaging of various flavours, production of tea bags, compressed tea, instant tea, tea pre-mix, bottled and canned tea. On the edges of established tea estates, organic tea should be grown creating a parallel supply within the available infrastructure. Tea eco-tourism should be further developed to enhance its value. In the near future Assam’s climate due to global warming will be more conducive to rubber plantation. To take advantage of this situation rubber plantation along tea estates should be encouraged. This can act as a precursor for developing a new industry in Assam.

 

Thus these clusters with right policy frameworks, technologies, inter-linkages and investments for utilizing available resources would bring Assam to a pre-eminent position in developing the social and economic condition of its people.
 

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