TGPSC CARE 26th September 2025 Current Affairs

Why in News?

Eight northeastern States of India, despite sharing over 5,400 km of international borders, contribute only 0.13% to national exports due to infrastructural gaps, policy exclusion, and a security-centric approach.

Introduction

• In August 2025, the U.S. imposed a 25% tariff on imports from India, citing trade deficits, India’s purchase of Russian crude, and retaliatory precedent.
• This tariff exposed India’s deep spatial imbalance in trade, where 8 northeastern States with 5,400 km of international borders contribute only 0.13% to national exports.
• The issue highlights India’s over-reliance on a few western and southern coastal States and the economic neglect of border regions, especially the Northeast.

India’s Spatially Concentrated Export Economy

India’s export infrastructure and policy incentives are heavily concentrated in a few industrial belts:

• This over-concentration creates economic dependence on a few corridors such as Gujarat and Tamil Nadu’s ports.
• A disruption in one region (e.g., floods in Gujarat or strikes in Tamil Nadu) can choke national trade flows — revealing low geographic resilience.

The Northeast’s Marginalisation

• Despite its strategic location, the Northeast’s export capacity is stunted due to historical, structural, and policy neglect.

(a) Geographical and Strategic Context

• 5,400+ km of international borders with Bangladesh, Bhutan, China, and Myanmar.
• Located at the crossroads of South Asia and Southeast Asia, envisioned as India’s “gateway to ASEAN” under the Act East Policy.

(b) Economic Neglect

• No operational trade corridors link the Northeast to foreign markets.
• Infrastructure gaps: lack of warehouses, cold-chain facilities, dry ports, and modern customs systems.
• Policy exclusion:
• No northeastern member in the Prime Minister’s Economic Advisory Council or the Board of Trade.
• Key schemes like RoDTEP and PLI prioritise industrial belts in western/southern India.
• The 2024 DGFT strategic export plan (87 pages) had no dedicated section for the Northeast.

(c) Security-Centric Approach

• The region’s border governance is dominated by surveillance and counterinsurgency, not trade facilitation.
• Scrapping of the Free Movement Regime (FMR) with Myanmar in 2024 curtailed cross-border economic and cultural exchanges.
• Key gateways like Zokhawthar (Mizoram) and Moreh (Manipur) have become securitised bottlenecks, not trade hubs.

Sectoral Impacts

(a) Tea Economy

• The Northeast (especially Assam) contributes over 50% of India’s tea output, mostly low-value CTC-grade tea sold at auctions.
• Faces price stagnation, labour shortages, and shrinking margins.
• A 25% tariff hike in western markets (US/EU) risks closures of estates and job losses.

(b) Energy Sector

• Numaligarh Refinery in Assam expanding to 9 MMT capacity is increasingly reliant on imported Russian crude due to local field depletion.
• Future US sanctions or shipping restrictions could disproportionately hurt Assam’s economy, not coastal hubs like Mumbai.

Borderland Decline: From Corridors to Containment

Once envisioned as regional trade arteries, Northeast borders are now marked by:

• Checkpoints and chokepoints, with poor customs infrastructure.
• Decay of the India-Myanmar-Thailand Trilateral Highway, once central to Act East plans.
• Shrinking local economies due to loss of cross-border trade and kinship ties.
• Surveillance has replaced commerce, undermining economic vitality and fuelling alienation in border communities.

Regional and Geopolitical Context

• While China invests in northern Myanmar’s infrastructure and influence, India’s eastern flank remains disconnected.
• Southeast Asian nations are creating alternative trade corridors, bypassing India.
• This weakens India’s Act East Policy and its claims of being a key player in the Indo-Pacific economic order.

(Image Source: The Hindu)

Key Challenges

• Infrastructural Bottlenecks: Lack of roads, warehouses, logistics hubs, and cold chains.
• Policy Exclusion: Absence of Northeast voices in trade policy formulation.
• Security-Centric Governance: Prioritising surveillance over trade facilitation.
• Concentration Risk: Overdependence on a few coastal States for exports.
• Geopolitical Vulnerability: Ceding influence in borderlands to external powers like China.

Implications for India

• Economic Resilience: A geographically skewed export economy cannot absorb global trade shocks.
• Regional Development: Continued neglect risks worsening economic disparities and insurgency-prone alienation in the Northeast.
• Strategic Autonomy: India’s Indo-Pacific ambitions are undermined if the eastern frontier stays economically brittle.
• Domestic Stability: Job losses in tea and other sectors could lead to labour unrest and out-migration.

Way Forward

To integrate the Northeast and build a cohesive national export economy, India needs a shift from rhetoric to infrastructure:

(a) Infrastructure & Logistics

• Complete and operationalise the India-Myanmar-Thailand Trilateral Highway and related ASEAN linkages.
• Invest in border haats, dry ports, multimodal logistics parks, and cold-chain facilities.
• Upgrade Zokhawthar and Moreh into modern trade hubs with streamlined customs.

(b) Policy Integration

• Include Northeast representation in the Board of Trade and key export councils.
• Tailor PLI and RoDTEP schemes to local industries such as tea, handicrafts, horticulture, bamboo, and oil & gas.

(c) Economic Diplomacy

• Reassess the scrapping of the Free Movement Regime to restore community-level trade.
• Prioritise cross-border trade agreements with Myanmar, Bangladesh, and Bhutan for mutual growth.

(d) Diversification of Export Base

• Develop value-added tea branding and packaging hubs in Assam to capture higher market value.
• Promote agro-processing, eco-tourism, and renewable energy sectors in the region.

Conclusion

• India’s response to the U.S. tariffs must go beyond bilateral diplomacy and address internal spatial imbalances in its trade architecture.
• A cohesive and shock-resilient export economy cannot be built by ignoring regions that share 5,400 km of borders with foreign markets.

CARE MCQ

Q5. Consider the following statements regarding India’s northeastern States and export economy:

1. The eight northeastern States account for less than 1% of India’s total merchandise exports.
2. Infrastructure and trade policies in the northeast are primarily designed for economic integration with Southeast Asia.
3. Schemes like PLI and RoDTEP have largely benefited industrial belts in western and southern India.
4. The Free Movement Regime with Myanmar was scrapped in 2024, affecting cross-border trade.

Which of the above statements is/are correct?

A) 1 and 2 only
B) 1, 3, and 4 only
C) 2 and 4 only
D) 1, 2, 3, and 4

Answer 5-B

Explanation

• Statement 1 is correct: The eight northeastern States, despite sharing over 5,400 km of international borders, contribute only 0.13% to India’s total merchandise exports.
• Statement 2 is incorrect: Infrastructure and trade policies in the northeast are largely security-centric rather than designed for trade or regional economic integration with Southeast Asia.
• Statement 3 is correct: Export promotion schemes like Production-Linked Incentive (PLI) and Remission of Duties and Taxes on Exported Products (RoDTEP) primarily benefit industrial belts in Gujarat, Maharashtra, Tamil Nadu, and Karnataka.
• Statement 4 is correct: The scrapping of the Free Movement Regime (FMR) in 2024 reduced cross-border trade and daily interactions with Myanmar.
• Therefore, option B is the correct answer.

UPSC PYQ

Q.    Increase in absolute and per capita real GNP do not connote a higher level of economic development, if (2018)

(a) Industrial output fails to keep pace with agricultural output.

(b) Agricultural output fails to keep pace with industrial output.

(c) Poverty and unemployment increase.

(d) Imports grow faster than exports.

Ans: (c)