Emerging Sectors in North East India &

Value of Networking

K. N. Hazarika,Chairman and Managing Director

NORTH EASTERN DEVELOPMENT FINANCE CORPORATION LTD. GUWAHATI, ASSAM

“Development Bank of North East India for North East India”

ABOUT NORTH EAST INDIA• Vast natural resources and a

cauldron of different people and cultures

• Eight States • Population:39 mn (3.75% of

India) (88% rural population)• Land area: 7.9% of India• Topography: 70% hilly

• http://databank.nedfi.com

Before Partition– Only three States (Assam, Manipur & Tripura)– Assam’s per capita income was 5th from the top– Industrialisation in 1834 with Tea companies– Coal industries in 1850’s– Timber export started in 1850’s– Railway tracks were laid in 1860’s– Asia’s first Oil refinery, Digboi (1901)– Agricultural productivity higher than national

average– Handloom & handicraft products

After Partition (1947)• Geo-political:

– Creation of erstwhile East Pakistan made the NER a land locked area : International Borders (98%)

– NER looked through security prism rather than development prism

– Creation of separate states– Illegal migration

• Economic:– Huge infrastructure gap - power, road, communication,

education– Lack of industrialization : Unemployment – Liberalization policy did not have much impact

Result: Elimination of Region’s traditional trade and commercial linkages that existed in pre-partition days.

NETWORK

• Network: a group of inter-connected or co-operating individuals/ institutions/ organizations

• Basic objective: to achieve identified end results • End results: social, cultural, economic, financial,

commercial benefits of participating groups and/ or larger collective well being

Value of Networking• Synergy• Output plus – (2+2 = 5)• Cross fertilization of ideas/ Cross learning• Leveraging on mutual strengths

– Knowledge– Experience– Expertise– Technology

• Cross selling

Why network with NE-NRIs?

• Substantial presence of North East Non Resident Indians (NENRI) in USA

• Significant contribution to US economy, academia & society at large

• Large intellectual capital• Intimate knowledge of people, society, economy

of North East India• Thus, the NENRI is a huge pool of resources NE

India can benefit from

North East – NENRI Network

• Great value in establishing this network• Can generate new & positive impact in NE India• Enhance visibility of NE India to wider audience• Create knowledge platform• Impetus for change & new direction in business

models• Enhance intellectual resources• Leverage inherent strength of the people of NER• Create goodwill for the Region

NENRI (contd…)• Networking would

– attract international investors– mobilize resources– promote joint ventures– facilitate inflow of NRI savings into NE India,

especially in the fixed income instruments– create market access & awareness of NE

products– enable technology transfer to suit local needs

Emerging Sectors

– Infrastructure– Education – Information Technology– Food Processing– Health care– Medicinal & Aromatic Plants (MAP)– Micro Finance

Infrastructure in NE IndiaInfrastructure in NE India

• Investment in next five years– Roads - USD 12500 million– Airports – USD 7000 million– Power – USD 15500 million– Railways – USD 1500 million

• Projected employment of 27 lakh people in construction industry alone

• Areas of intervention : investments, R&D, Design, Project Management, HR Interventions etc.

Education• Outflow of students to higher centers of learning

– Lack of quality education/ educational infrastructure– Especially technical & managerial education

• Thus, need for quality education – a priority• Private University Bill has been passed in Assam,

Meghalaya, Nagaland & Tripura – facilitating factor• Can cater to the needs of neighboring countries –

Cross-country market.• Areas of Intervention: R&D, University linkages, State of the

Art facility, faculty exchange programmes, scholarships/ fellowships, distance learning, franchisees, etc.

Information TechnologyInformation Technology• North East - ideal destination for IT, specifically for

ITES sector.– English education– Neutral English accent: ideal for BPO industry– Proficiency/ efficiency acknowledged by captains

of IT industries outside the NER• Could be a valuable KPO & KEPS destination.• Areas of intervention: investments in IT & ICT, high

end facility for skill development and training, infrastructure, business linkages

Food Processing Sector• Less than 12% of the total food and vegetable produced in the Less than 12% of the total food and vegetable produced in the

Region is processedRegion is processed• Over 30% is wasted owing to lack of scientific post harvest Over 30% is wasted owing to lack of scientific post harvest

management management • Prospects of Food Processing Industries in NERProspects of Food Processing Industries in NER

– Availability of raw materials within the region – Large demand in domestic market– Export potential– Incentives and facilities from the government

• Areas of intervention : post harvest management, processing technology/ packaging, R & D for consumer friendly product development & market linkages

Health careHealth care• Lack of adequate healthcare facility in NER

– Flight of capital– Not affordable for economically disadvantaged sections– Inconvenient for the sick & aged

• The private healthcare sector is doing relatively well in the NE.• However, sufficient investment in speciality care is not

forthcoming.• Huge market including neighboring countries.• Incentives for healthcare sector under NEIIPP, 2007.• Areas of intervention: more investments in private healthcare

sector, introduce international benchmark/ best practices, technology transfer, health insurance services etc.

Medicinal & Aromatic Plants (MAP)• About 1500 commercially exploitable MAPs.

• Trade volume and projected export The export volume out of NE states estimated to be USD

25 million per annum. Projected export volume: 2009-10 (USD 35 million)

• Unique Species : Salam Panja (Orchis latifolia), Caterpillar mushroom (Cordyceps sinensis), Agarwood (Aquilaria sps), Sugandhmantri (Homalomena aromatica), Naga chilli (Capsicum pruriens) etc.

• Areas of Intervention: R & D, biotechnology, processing and marketing linkages.

Micro Finance in NE India• Estimated Micro Finance market

– Demand: USD 625 million– Supply : less than USD 25 million

• FDI already started through agencies like UNITUS, Grameen Trust etc.

• Expected return: 9% pa over 10 yrs.+ low risk • Impact: employment generation, micro enterprise

development, poverty reduction, women empowerment• Areas of Intervention : investments for introduction

of IT & ICT, equity investments, capacity building

Can we join hands to…..Can we join hands to…..

• create better value chain management • enhance quality of products and processes• promote

technology transfer/ innovations including rural technology

capacity building/ skill up-gradation/ HR development product development/ design diversification/ market

access

Can we join hands to create….Can we join hands to create….• PPP business models for emerging sectors• IT & ICT enabled credit delivery mechanism at the

grassroots• Financial partnership

– to enable equity investments & create a specialized Sustainable Livelihood Promotion Company (IFC, BASIX) – expanding Micro Finance & reducing poverty

– NENRI Fund

Proposed investment portfolio of NENRI FundDevelopment activities Emerging sectorsIncubationStartupsVenture capital

InfrastructureEducation Information TechnologyFood ProcessingHealth careMedicinal & Aromatic Plants (MAP)Micro Finance

Strategy for utilization of NENRI Fund

• 15% for developmental activities• 85% for emerging sectors• to be managed by the experienced fund

managers• oversight committee to monitor the fund• subject to all regulatory clearances

Investment horizon of NENRI Fund

NEDFi – A Potential Credible Partner

• A single window partner to:– facilitate financial intermediation for corporates/

HNIs– raise capital and channel FDI funds for North

East India– raise debt & equity

• Banking system expanding in North East India, which can be a launch pad for innovative interventions by NRIs

About NEDFiAbout NEDFi• NEDFi promoted by All India Financial Institutions in

1995 to catalyze & accelerate economic growth in North-East India

• Only dedicated development Financial Institution operating in the eight states of North East India (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim & Tripura)

• Beyond lending – creating an enabling environment• Creating synergy & impetus to achieve growth

Yes, we believe, there is value in Networking.

Let us join hands to increase the Net worth

of North East India.

Thank You……Thank You……

North Eastern Development Finance Corporation Ltd. (NEDFi)

Basundhara Enclave, B.K. Kakati Road, Ulubari, Guwahati

Assam, India - 781007 :+91-361-2529202-206

Fax:+91-361-2529178,2529338.E-mail: cmd@nedfi.comweb site: www.nedfi.com

(for more information, p.r.t. http://databank.nedfi.com)