In pursuit of an industrialized Assam

Kalpajit Saikia

(The writer can be reached at kalpajitsaikia@gmail.com)

IMF in its latest "world economic outlook" projected 10.3% contraction of India's current year GDP, a downgrade of 5.8% from the earlier projection. But it also said that that there is a possible rebound of 8.8% in 2021. Though IMF's projection of growth in 2021 is on a very low base, the number is significant. Experts predict that there will be a far bigger rebound than what is predicted by the global agencies. Part of the rebound will also be influenced by India's increased emphasis on self-reliance and possible dethroning of China as the manufacturing capital of the world. Green shoots are already visible in every aspect of the economy. Electricity consumption has increased, GST collection is very close to pre-Covid levels, consumer goods and IT Industries are reporting better-than-expected results, automotive sale is picking up. If this morning is a measure of the days to come, India is on the path of an astounding economic recovery.

Coronavirus has changed the way Industrial economy of a country was run. The countries across the world are planning to reduce their trade deficits with China. America's trade war with China resulted in decline in goods trade deficit by 17.6% in 2019. The 2019 figures of USD 345.6-billion trade deficit is expected to decline further. Similarly, EU's trade deficit of USD 164 billion is also expected to reduce in next few years. The businesses in these countries will look at alternative sourcing locations and India will surely be a prime contender. India's total non-oil import in the year 2019 was approximately USD 375 billion. With the government's massive focus on reducing imports and making India self-reliant, this value is expected to decline. This provides a massive opportunity to Indian businesses.

India itself is a massive market and some of the numbers are staggering. India's FMCG sector has grown from USD 31.6 billion in 2011 to USD 52.75 billion in 2017-18 and expected to reach USD 220 billion by 2025. India has become 5th largest automotive market in the world in 2019. This Industry manufactured 30.91million vehicles in 2019 and expected to reach USD 300 billion by 2026. Indian appliance and consumer electronics (ACE) market reached USD 10.93 billion in 2019 and expected to reach USD 21.18 billion by 2025. Electronics hardware production in the country increased from USD 31.13 billion in FY14 to USD 65.53 billion in FY19.Television industry in India reached an estimated USD 11.26 billion in 2019 and is projected to reach USD 13.66 billion by 2021. Electronics, domestic appliances and air conditioner market in India were estimated to be around US$ 0.86 billion, USD 1.80 billion and USD 2.56 billion respectively in 2020. Shipment of TVs in India increased 15 per cent annually to reach the highest-ever level of 15 million units in 2019. Smartphone shipments in India increased eight per cent y-o-y (year-over-year) to reach 152.5 million units in 2019, thereby making it the fastest growing among the top 20 smartphone markets in the world.The apparel market in India is projected to grow from USD 65 billion in 2019 to USD 85 billion 2021.

With the prospect of global businesses shifting its base and bustling domestic demand, India is on the cusp of a massive economic growth. Assam needs to pick up speed and try to grab the advantages. It will be understandably difficult to attract the global businesses to Assam immediately because of the issues related to Industrial environment and Infrastructure. But with sound planning and execution by the government, the mammoth Indian market is up for grabbing for Assamese entrepreneurs.

Assam has lot of limitations for a thriving Industrial environment. There is lack of right infrastructure, non-conducive industrial climate, limited skilled manpower and challenges of transportation and logistics. Businesses will be reluctant for large investments immediately. It will be a step by step process of building the right environment and attracting investment. While the government should target Industries, which generate large-scale employment with less capital investment, it should also look at the Industries which can be growth engine for future. There are 6 Industries which can change the face of Assam's Industrial growth.

1. Apparel: India's apparel Industry was estimated atUSD 100 billion in 2019 employing 45 million people and expected to grow at 12 per cent CAGR. A labor-intensive Industry with low capital investment, this can be the Industry which can change the face of unemployment situation in Assam.

2. Plastic Goods: Plastic consumption in India is steadily increasing over the years, but still there is a huge gap. While per capita plastic consumption in India is 11 kg, the number for America is 109 kg. With rapid urbanization, there will be increase in consumption and Assam can take the advantage.

3. Milk and Meat: Assam is a laggard in milk production. While per capita availability of milk per day in India is 394 gm per day, it's 71 gm for Assam. Targeting to match the national number itself will give massive boost to the Industry. In meats, the focus segment should be pork. Pork is the most widely consumed meat globally with a market size of USD 400 billion. With right planning backed by scientific farming, pork Industry in Assam can take the economy to newer heights.

4. Tourism: A lot has been written about Tourism Industry's potential in Assam. But for last many years this potential is not converted to an Industrial boom. The numbers are disappointing. In 2018-19, the number of domestic tourists to Assam was around 47L and foreign tourist was 25,000. Contrast this with states like West Bengal which received 8.5 crore domestic tourists and 16L foreign tourists in the same period. Numbers of Maharashtra or Gujarat are also much more. It's time to convert the so-called potential to real business. Assam's economy will scale new heights with strong growth in tourism Industry.

5. Pharmaceutical API: Assam's focus on Pharma API (Active Pharmaceutical Ingredient) Industry will have both immediate and future benefits. Right now, Government of India is trying to reduce dependency of Pharma API on China who accounts for 70% of the global supply of APIs. GOI has announced Rs 10,000 crore incentive for manufacturing Pharma API. Assam can target the pharma companies trying to set-up API manufacturing units immediately. A stable pharma API industry can form a strong foundation for pharma formulation manufacturing Industry.

6. Medical equipment: Globally a USD 430 billion industry, medical equipment Industry has seen significant growth in last few years. This Industry is slowly moving from institution focused Industry to consumer industry. Currently, the domestic market is dependent on imports to a great extent. With the push for self-reliance, there will be significant growth of this Industry and Assam can take the first-mover advantage.

We will elaborate on each of these Industries later.

The business dynamics are changing everywhere. New destinations are emerging as Industrial hubs and traditional locations are facing challenges. Assam must snatch the advantage right now.

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