Arunachal Pradesh

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Industrial Development & Economic Growth in Arunachal Pradesh

December, 2019

Arunachal Pradesh is the largest among the seven states located in the northeast of India with an area of 83,743 sq kms. 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. The state has considerable mineral reserves that offer huge potential. The state’s hydropower generation potential is estimated at 50,328 Megawatt (MW).

The state’s diverse topography offers ample of opportunities for non-timber-based industries such as bamboo, cane, and medicinal plants. Horticulture has a vast potential, owing to good agro-climatic conditions and topography, for the development of varied varieties of fruits and vegetables.

At current prices, the Gross State Domestic Product (GSDP) of Arunachal Pradesh reached Rs. 299.74 lakh crore (US$ 4.13 billion) in 2020-21. The state’s GSDP increased at a compound annual growth rate (CAGR) of 10.1% between 2015-16 and 2020-21.

The resources, policy incentives and climate in the state support investments in mining and mineral products (including cement), tissue culture and floriculture, plantation crops (tea, rubber, etc.) and agro-based industries.

The state’s location provides opportunities for international trade with Asian countries such as Myanmar, Bhutan, and China. Textiles and handicrafts from the state are in demand in neighboring countries.

The Central Government approved North East Industrial Development Scheme 2017 to promote industrialization in the states in the northeast region and to improve productivity in Government departments through computerisation.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflows to the northeast states1 totalled US$ 142 million between April 2000 and March 2021.The state attracted FDI inflow worth US$ 5.55 million between October 2019 and March 2021.

The Department of Industries has set up District Industries Centre’s (DICs) and Sub-District Industries Centre’s (Sub-DICs) for the industrial development of small scale, tiny, and village industries.

Major initiatives taken by the Government to promote Arunachal Pradesh as an investment destination are:

  • In FY21, the Ministry of Road Transport and Highways has sanctioned four projects of 52.4 kms worth Rs. 1,139.12 crore (US$ 156.69 million) for Arunachal Pradesh. All projects will be undertaken on the Engineering, Procurement and Construction (EPC) mode.
  • In May 2021, Flybig’s first flight arrived at the Pasighat airport in Arunachal Pradesh from Guwahati. Direct flight connectivity with Guwahati, which has daily flights with major cities in the country, can boost tourism in the state.
  • The state government has dedicated 2021 as the ‘Year of Education’ with a planned investment of Rs. 1,000 crore (US$ 137.55 million) for the sector. The government will launch 'Mission Shiksha' to improve the standard of education in the next two years with six focus areas, including infrastructure development of schools, technology intervention through information and communication technology and digital initiatives.
  • In May 2021, the Arunachal Pradesh government released Rs. 66.0 crore (US$ 9.1 million) from the State Disaster Response Fund (SDRF) to the health department and all deputy commissioners of the district for COVID-19 related expenses.
  • In April 2021, the state Department of Tourism hosted ‘Trans-Arunachal Drive 2021’, an initiative to boost adventure tourism. Eminent journalists, bloggers and tour operators took part in the 12-day drive along the Trans Arunachal highway from Namsai to Tawang.
  • In February 2021, the Union Government approved construction of roads measuring 598 kms with an estimated cost of ~Rs. 1,100 crore (US$ 148.29 million).
  • In October 2020, the Airports Authority of India (AAI) announced that the greenfield airport at Hollongi, which is 15 km from Itanagar in Arunachal Pradesh, is likely to be constructed for Rs. 650 crore (US$ 87.97 million) by November 2022.
  • During 2019, foreign tourist arrival in the state reached around 7,825 while domestic tourist visits stood at 555,639. The state won the Best Emerging Tourist Destination in India award for 2019 as well as the Best Emerging Green Destination of 2019.
  • In November 2020, the central government announced a scheme under which 50% subsidy will be provided for air transportation of 41 notified fruits and vegetables from the Northeast and Himalayan states to any place in the country. The transportation subsidy will be provided as part of the ‘Operation Green Scheme TOP to TOTAL’.
  • Under State Budget 2020-21, Chief Minister Comprehensive State Road Plan 2019-24 has been approved. The aim is to improve 150 kms of capital complex road and upgrade important inter-state and inter-district roads to the specification of State Highway (SH).
  • Government of India launched “Comprehensive Scheme for Strengthening of Transmission and Distribution System” to provide reliable and stable power connectivity to all the districts of Arunachal Pradesh. Under State Budget 2020-21, Rs. 10 crore (US$ 1.42 million) has been allocated for the scheme.
  • Tomo Riba Institute of Health and Medical Sciences (TRIHMS), which is the first medical college in the state, was made operational and it received its first batch of fifty MBBS students in 2018. In State Budget 2020-21, Rs. 40 crore (US$ 5.67 million) has been proposed to provide as Grants-in-Aid for smooth running of the Hospital and Medical College.
  • Under Jal Jeevan Mission (JJM), every rural household is to be provided with a Functional Household Tap Connection (FHTC), ensuring adequate and safe drinking water on a regular basis by 2023.
  • Arunachal Pradesh Industrial Policy 2020, focusing on Micro, Small and Medium Enterprises, will provide financial, technical, and training support to the youths who wish to open enterprises, was launched with a capital allocation of Rs. 10 crore (US$ 1.43 million).

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