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 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 enormous 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, Arunachal Pradesh’s GSDP is estimated to reach Rs. 37,870 crore (US$ 4.60 billion) in 2023-24.

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 computerization.

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 2023.

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 August 2021, Chief Minister Mr. Pema Khandu announced that the 2,396-kilometre-long Trans Arunachal Highway (TAH) connecting 16 districts in Arunachal Pradesh, is being constructed by four agencies—the state Public Works Department (PWD), Ministry of Road Transport and Highway (MoRTH), National Highway Infrastructure Development Corporation Ltd. (NHIDCL) and the Border Roads Organization (BRO).
• In FY23, construction of 2,000 km of road per year was announced by the State Government.
• In 2021-22 (as per advance estimates), the total horticulture production reached 193 thousand metric tonnes.
• Tourist arrivals in the state was recorded at 103,097 in 2021, with 102,915 domestic and 182 foreign visitors.
• 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 US$ 24.33 million (Rs. 200 crore)
• Arunachal Pradesh has allocated 11.4% of its total expenditure towards roads and bridges, which is higher than the average allocation by states (4.5%).
• Arunachal Pradesh will soon be witnessing the inauguration of Tezu Airport project. Airport Authority of India (AAI) re-developed the airport under the Regional Connectivity Scheme (RCS) UDAN at a cost of US$ 20.68 million (Rs. 170 Crore).
• In the State Budget 2022-23,
  • The government announced the construction of major infrastructure projects like District Secretariat at Ziro, Outdoor stadium at Yupia and Ziro.
  • The state government has allocated Rs. 100 crore (US$ 12.58 million) each for Atmanirbhar Krishi Yojana (agriculture) and Atmanirbhar Bagwani Yojana (horticulture).
  • The government has allocated Rs. 15 crore (US$ 1.89 million) for the CM's Rural Housing Scheme
• In March 2022, the Government has given ‘in-principle’ approval to set up a Greenfield airport in Hollongi (Itanagar), Arunachal Pradesh.
• In August 2021, the Government of Arunachal Pradesh signed a deal with the North Eastern Electric Power Corporation (NEEPCO) Ltd. for the development two hydropower projects of 90 MW New Melling project in Tawang district and 120 MW Nafra project in West Kameng district.
• In August 2021, Speaker of the State Legislative Assembly Mr. P D Sona laid the foundation stone for a 40-bed hospital and dedicated a portable ultrasound machine and portable lab for the Shi-Yomi area residents.
• In August 2021, the Arunachal Pradesh cabinet has approved two credit-linked schemes to facilitate a Rs. 300 crore (US$ 41.10 million) investment in agro-based sectors to strengthen the state's economy through agriculture and horticulture.
• Under the state budget 2021-22, the state government has earmarked Rs. 60 crore (US$ 8.22 million) subsidy (each) for Atma Nirbhar Krishi Yojana (agriculture) and Atma Nirbhar Bagwani Yojana (horticulture).
• 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 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 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.
• 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).