Introduction
Arunachal Pradesh is the largest among the seven states located in the northeast of India, with an area of 83,743 sq kms. It shares its borders with the neighboring countries of Bhutan in the west, China (Tibet) in the north and northeast, Myanmar in the east and southeast, and the Indian states of Assam and Nagaland in the south. The geographic location of the state provides immense opportunities for international trade with South Asian countries such as Myanmar, Bhutan, and China. At current prices, Arunachal Pradesh’s GSDP is estimated to reach Rs. 47,823 crore (US$ 5.58 billion) in FY26. The GSDP increased at a CAGR of 10% between FY16 to FY26.
The state’s per capita GSDP was Rs. 2,79,398 (US$ 3,231) in FY25. The per capita GSDP increased at a CAGR of 9.11% between FY16 to FY25.
The land is mostly mountainous with Himalayan ranges. The state is divided into five river valleys - the Kameng, the Subansiri, the Siang, the Lohit, and the Tirap. These river valleys have immense hydropower potential, currently estimated at 50,328 Megawatt (MW), or approximately 22% of India's current power generating capacity. As of August 2025, Arunachal Pradesh had a total installed power-generation capacity of 783.88 MW.
The state has significantly scaled up its capacity by capitalizing on its hydropower potential. The state has significantly scaled up its capacity by capitalising on its hydropower potential. 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. In 2021-22* total horticulture production reached 205.34 thousand metric tonnes (MT).
Some of the other key industries of the state include art and crafts, weaving, cane and bamboo, horticulture, power, and mineral based industry. The state and central Governments have both offered huge fiscal and policy incentives for the development of thrust sectors in the state. Some of these policies include Public Private Partnership Policy 2011, the State Industrial Policy 2008, and the Hydro Power Policy 2008.
Recent Developments in Key Sectors
- According to the Department for Promotion of Industry and Internal Trade (DPIIT), state attracted FDI inflow worth Rs. 53.25 crore (US$ 7.03 million) between October 2019-June 2025.
- Merchandise export from the state reached Rs. 17 crore (US$ 1.93 million) in FY25. Engineering goods, fruits and vegetables, and tea were the most exported items from the state.
- According to the Telecom Regulatory Authority of India (TRAI), Arunachal Pradesh had 1.26 million wireless subscribers and 0.01 million wireline subscribers as of March 2025.
- Arunachal Pradesh had a total tele-density of 80.06%, as of March 2025.
- In State Budget of FY26, the government allocated Rs.1,410 crore (US$ 164.55 million) in rural development.
- In the State Budget FY26, Rs. 3,466 crore (US$ 404.48 million) has been allocated for capital outlay on Education, sports, art and culture.
- In the State Budget FY26, Rs. 1,257 crore (US$ 146.69 million) has been allocated for capital outlay on Health and Family welfare.
- Under the state budget FY26, the state government has allocated Rs. 2,618 crore (US$ 305.52 million) each for Agriculture and allied activities.
- In the Arunachal Pradesh state budget for FY26, a new Comprehensive State Power Development Programme has been announced with an outlay of Rs. 2,000 crore (US$ 231.29 million) over the next three years.
- Arunachal Pradesh has allocated 10% of its total expenditure towards roads and bridges, which is higher than the average allocation by states (4.3%).
- In October 2025, Centre sanctioned over Rs. 55,000 crore (US$ 6.39 billion) for the construction of “Frontier Highways” in Arunachal Pradesh to improve inter-district connectivity, border area development and tourism potential.
- On October 7, 2025, the Arunachal Pradesh Cabinet approved forming two joint-venture companies with National Hydroelectric Power Corporation (NHPC) and North Eastern Electric Power Corporation (NEEPCO) to raise the state’s hydropower capacity to 19 GW.
- On October 6, 2025, Union Minister Mr. G. Kishan Reddy and Chief Minister Mr. Pema Khandu inaugurated the Namchik Namphuk Coal Mine in Changlang district, Arunachal Pradesh, the state’s first commercial coal mine with reserves of about 1.5 crore tonnes.
- On September 22, 2025, the Prime Minister of India launched and laid the foundation for infrastructure projects worth more than Rs. 5,100 crore (US$ 595.17 million) in Arunachal Pradesh.
- The Border Roads Organisation (BRO) states that the 32-km Pene–Tato stretch of the Aalo–Mechuka road in Shi-Yomi district (Arunachal Pradesh) will be double-laned and completed by March 2026.
- The Centre has allocated Rs. 398 crore (US$ 46.03 million) under the Central Road and Infrastructure Fund for nineteen road-development projects in Arunachal Pradesh for FY25.
- As of March 31, 2025, the 26.15 km Murkongselek–Pasighat rail link between Assam and Arunachal Pradesh reached 45% completion, with an estimated cost of Rs. 1,252.49 crore (US$ 144.85 million).
- Mr. Jyotiraditya M. Scindia, Minister for Civil Aviation and Steel inaugurated the newly developed infrastructure of Tezu Airport in Arunachal Pradesh on September 24, 2023. Airport Authority of India (AAI) re-developed the airport under the Regional Connectivity Scheme (RCS) UDAN at a cost of Rs. 170 Crores (US$ 20.68 million).
- The airport is developed on 212 acres of land, and capable of handling operations for ATR 72 type of aircraft. AAI undertook the development and upgradation work to operationalize Tezu Airport at the request of the State Government.
- Prime Minister, Mr. Narendra Modi inaugurated Donyi Polo Airport, Itanagar and dedicated 600 MW Kameng Hydro Power Station to the nation in November, 2022. The Prime Minister said that Donyi Polo Airport will be the fourth operational airport for Arunachal Pradesh, taking the total airport count in the North-East region to 16.
- The state has significantly scaled up its capacity by capitalizing on its hydropower potential. The state’s hydropower generation potential is estimated at 46,850.17 Megawatt (MW).
- In budget 2023-24, Chief Minister’s Comprehensive State Road Development Plan: Under this plan, 3,650 km of important roads which connect to areas such as: the Capital Complex, District Headquarters and state highways will be improved at a cost of Rs. 200 crore (US$ 24.33 million)
- Agriculture and Forest-Based Industries: The state is largest producer of kiwis in India and the second largest producer of large cardamom. The state also has various inland fisheries resources.
Arunachal Pradesh, the largest state in Northeast India, is strategically located along international borders with Bhutan, China and Myanmar, offering strong potential for cross-border trade and connectivity. With a GSDP of US$ 5.58 billion in FY26 and steady growth, the state’s economy is anchored in agriculture, horticulture and hydropower, supported by vast natural resources and rich river systems that provide one of India’s highest hydropower potentials. Ongoing public investments in roads, power, education, health and rural development, along with major infrastructure projects such as frontier highways, airports, rail links and large hydropower ventures, are strengthening connectivity and industrial prospects. Backed by investor-friendly policies and rising focus on energy, agri-based industries and border-area development, Arunachal Pradesh is emerging as a key growth and strategic hub in the Northeast.
FACTFILE
Capital
ItanagarGeographical Area (sq km)
83,743State Language
Assamese, Bengali, Hindi and EnglishLiteracy Rate
65.38 per centKey Industries:
Arts and Crafts
Weaving
Cane and bamboo
Carpet weaving
Wood carving
Ornaments
Tourism and horticulture
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