East Is A Sunrise Industry

THE Japs shot off the starting block first; the Brits followed. Now the Yanks are getting in, with the Chinese not far behind. Foreign capital has started trickling into the long-neglected, cash-strapped states of east and Northeast India. The list of projects is impressive. The British, the Americans, the Japanese are getting into infrastruture. The Chinese are planning a consulate in Calcutta to oversee investment flow.

Sceptics—when it comes to talk of investments in the east, even optimists turn sceptical—wonder about the how and why of this phenomenon. The answer: East and Northeast India, plus Nepal, Bhutan, Myanmar and Bangladesh are key to global power in the next century.

For one thing, the region boasts huge natural/mineral resources—uranium, coal, natural gas, oil—exportable crops like tea and jute, and major engineering, computer software and electronics hubs. The area has at least five major ports (two in Bangladesh) and is close to tigerish east Asia. The combined population of West Bengal, Bihar, Orissa and Northeast is some 220 million, nearabout the US'. Add another 170 million for Bangladesh, Myanmar, Bhutan, Nepal. Regardless of the region's overall backwardness, there are sizable pockets of development and sunrise industries especially in Orissa, West Bengal and Bangladesh.

The Japs were the first to assess the region's potential. Over recent decades, they've successfully sold the idea of setting up a south Asian "co-prosperity sphere". It's no coincidence that Japanese firms are big investors in Myanmar and Bangladesh where they've built some major bridges. Their proposals for West Bengal too are impressive (see A Yen for the Near East). Japanese diplomats monitor political trends closely.

But what about bad roads, poor work culture, overall power shortage (West Bengal excepted), not to mention a stolid bureaucracy? Doesn't it make much better sense to put one's money in the developed west coast region or the fast developing south?

Ironically, these fast-forward areas may have become victims of their own growth. Explains a British diplomat: "Sure, some roads are pretty bad, but in overall terms, what are a few bumps? The land comes certainly cheaper than Mumbai, Delhi or Ban-galore. We save millions on this count alone. And no, there are no major problems, there is political stability in Bengal, the government is slow but cooperative." For the record, British investors, no longer interested in Hong Kong, have set up three small units in Durgapur alone. The UK has pledged over Rs 246 crore for the state's education system. Companies are interested in mining in Bengal and Orissa. The Price Waterhouse group has set up a new business complex at Salt Lake City, Calcutta.

Says a Japanese executive: "We've faced no problems so far. If anything interferes with our schedule, we take it seriously and approach the state government to sort things out. We must say Jyoti Basu and Som-nath Chatterjee are extremely helpful." As for US investors, Caltex has set up a new unit in Haldia and US firms will participate in road building and other infrastructure projects here and in the Northeast. But the Americans don't conceal their distaste for Left-wing politics. ("If only they stopped saying they were communists....")

 Says Jayanta Sarkar, former editor, Dateline Business: "These days, investors aren't bothered about ideology. The political risks of investing here have gone down. There's no nationalisation bogey, no fundamental opposition to reforms. That's reassuring."

The Chinese are more forthright. Leaders of a trade delegation to Calcutta, while the Indo-US summit was on, said China gives priority to projects in the east, especially West Bengal. "It's the gateway to the Southeast and close to Myanmar, Bangladesh, Bhutan and Nepal."

Basu is honest enough to admit why investors are interested in the region: "They assure me they're interested in returns, not ideology. You can hire four workers here for the cost of one in the US or Europe. It brings down their costs, naturally they want to make profits. It's fine with us, after all they have not come here to do charity."

The unstated politics goes a long way in explaining the sudden rediscovery of the Indian east. China, apart from selling arms worth $2 billion to Myanmar, has emerged the biggest player in that mineral-rich country. In return, they've secured special facilities on Coco and Hianggyi islands, offsetting the naval leverage India gets due to the Andamans or the US from Diego Garcia. Both the US and China keenly monitor India's progress in missile technology and Orissa has impressive facilities.

The US cannot sit idle and watch the Chinese get a foothold here. Nor can it let Japan have an economic run of the area. Hence, the scramble. It can only get more intense, and the governments are too feeble to influence events more than partially. For where trade goes, politics is sure to follow.