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. As of March 2024, Arunachal Pradesh had a total installed power-generation capacity of 773.32 MW. The state has significantly scaled up its capacity by capitalising on its hydropower potential.

The state’s diverse topography offers ample 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. It depicts a growth of 28.9% over 2022-23 budget estimates.

The state’s per capita GSDP was Rs. 2,56,410 (US$ 3,115.08) in 2022-23. Per capita GSDP increased at 11.0% from 2021-22 to 2022-23.

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 industrialisation 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), The state attracted FDI inflow worth US$ 5.55 million between October 2019-March 2024.

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 March 2024, the Prime Minister Mr. Narendra Modi, laid the foundation stone for the 2,880 MW Dibang multipurpose Hydropower project of NHPC limited. The project is located in the lower Dibang valley district of Arunachal Pradesh, and the foundation stone laying ceremony took place during the Viksit Bharat Viksit North East program in Itanagar, Arunachal Pradesh.
• Government has approved Vibrant Villages Programme (VVP) in February 2023 for comprehensive development of villages of 46 blocks abutting northern border in 19 districts. In the State Budget 2023-24 government allocated Rs. 50 crore (US$ 6 million) to Rs. 200 crore (US$ 24 million) for Deen Dayal Upadhyaya Swavalamban Yojana which aims to provide financial support to young individuals looking to establish enterprises in sectors like eco-tourism, hotels, bakeries, and traditional textiles and weaving.
• In FY23, construction of 2,000 km of road per year was announced by the State Government.
• In 2021-22 (as per third advance estimates), the total horticulture production reached 205.23 thousand metric tonnes.
• Tourist arrivals in the state was recorded at 103,097 in 2021, with 102,915 domestic and 182 foreign visitors. During September 2023, tourist arrival stood at 2,688 including domestic travelers (2673) and foreign travelers (15).
• 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).
• 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%).
• Jyotiraditya M. Scindia, Minister for Civil Aviation and Steel inaugurated the newly developed infrastructure of Tezu Airport in Arunachal Pradesh on September 24, 2023. 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.
• The Prime Minister, Shri 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.
• As per budget estimates 2023-24, Arunachal Pradesh intends to spend Rs. 1,186 crore (US$ 142.5 million) over urban development and planning. It shows 84% increment over the revised estimates from the budget 2022-23.
• 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 August 2021, the Government of Arunachal Pradesh signed a deal with the Northeastern 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 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.
• 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).