Presentation on Business Environment (208)

Topic:-
Major Constraints of doing business in North East(India)
8 May 2014 1
Introduction
As a business manager, we have to deeply
understand the pros and cons of selecting a
location of doing business. Half of the success
of the business is largely depends on selecting
the location. A successful business practices of
one region can not be employed in the other
region because environment is different. As
business is a part of the large environment, we
should analyze those factors of the
environment for running the business
successfully.
North East Profile
The North East India comprises of eight states,
covering 263,179 sq km which is about 8% of the
total geographical area of the country.
98% of its border is with five different countries of
South AsiaNepal, Bhutan, China, Myanmar and
Bangladesh.
The total population of the region is about 38
million, 3.8 per cent of the countrys total population,
of which
Assam contributes 68 per cent


The region is richly endowed with bio-diversity, hydro-
potential, minerals like oil and natural gas, coal, limestone,
dolomite, graphite, sillimonite etc. and forest wealth. Over
10 per cent of forest products requirement in the country
are met from this region only.

Arunachal Pradesh alone is expected to generate 2,67,474
MW i.e. 30 per cent of the total available in the country.

The present status of
industrial sector in NE India

Northeast India has remained industrially underdeveloped. In
the post globalization period i.e. 1991-2002, Meghalaya,
Nagaland and Tripura have performed better than the national
level. The growth rate experienced in these states is not only
higher but also accelerating.

While Assams growth rate is lower in the post globalization
but grows at an accelerating rate which is a positive sign.

It can be better understood from a glance at the table showing
the shares of industrial sectors in domestic products



Percentage Share of Industry in GDP at Current Prices in 1999-2000

State/ Region/ Mining and Manufacturing Electricity, Industry
Country Quarrying Gas & Water Total
Supply V=II+III+I
I II III IV


Arunachal Pradesh 0.86 2.50 2.88 6.24

Assam 7.67 9.04 1.41 18.12

Manipur 0.00 8.22 3.83 12.05

Meghalaya 6.86 2.10 3.58 12.54

Mizoram 0.52 1.24 0.71 2.47

Nagaland 0.00 1.34 1.77 3.11

Tripura 1.08 2.18 1.98 5.24

The Northeast Region 5.57 6.94 1.84 14.35

India 2.33 14.78 2.49 19.60




While the share of industries taken together is lower in each
state of the region than the all India share, in case of
manufacturing the share is even less than half of the all India
share. Even for Assam, which has a long history of modern
manufacturing, the share was below 10% in 1999-2000 - much
less than 14.78%, the share for the country as a whole. The
relatively small share of manufacturing sector in the NDP of
the region indicates that the region has not made much
progress in industrialization during the post-independence
period.
Constraints
A)Insurgency :-
The problem of insurgency has become
the stumbling block in the course of development.
It foundered every development strategy and
hampered all the developmental works.
Kidnapping, extortion, killing, bandh, strikes and
curfews have become the order of the day. Today,
the region has become the killing field and
specialized in the export to death bodies, if not
the manufacturing products.
B) Infrastructure :-


The rich natural and human resources
available in the region could not be utilized to the
full extent mainly due to the geo-political
condition. The negligence of the central
government in the past and due to the problems of
insurgency at present resulted into the gross
deficiency of infrastructure in the region. Due to the
poor infrastructure facilities, no one have the willing
to set up business in N-E region.
C) Dearth of local capital and
entrepreneurship :-
The deficiency in local entrepreneurship may be
traced to the factors that the local population has
traditionally not being business oriented and white
collar jobs are commonly preferred to entrepreneurial
ventures by the educated youth.
D) Marketing and transport
bottlenecks

Marketing and transport bottleneck is the most
serious constraint on industrial progress of the
region. With the region lagging behind the country
in the pace of economic growth for decades, the
local market is not a large one. To look for markets
beyond the region, weak connectivity with the rest
of the country and lack of access to bordering
countries are serious deterrents.


Two prolonged measures:-

Some possible solutions, not necessarily alternatives, can be
thought of to address the problem. These are .
(a) simultaneous development of several activities with mutual
linkages and
(b) opening out to the neighboring countries.
(c) Role of Local Government and Civil Society.
Conclusion :-

In spite of the many constraints, there are
also various opportunities lying in the NE like
Tourism, Boarder Trade etc. Adapting to
what environment demands, a business can
avail many gains from this region because NE
region has a basket of natural resources.
8 May 2014 14