West Bengal Can Be Lever To Modi’s Act East Policy, Despite Political Adversary – Analysis

Notwithstanding political animosity between Centre and Chief Minister of West Bengal Mamata Banerjee, the state has a distinct advantage to become pivot to Modi’s Act East policy. Its geographical proximity to eight states of North East and four nations (Bangladesh, Bhutan, Nepal and Myanmar) opens up ample opportunities to become the gateway to East and South East Asia. Its land proximity to North East can act a potential axis  to North East – Myanmar connectivity, which emerged a new dimension of Indo – Pacific outreach after Myanmar attained full democracy in November 2016.

Myanmar is the gateway to ASEAN. It is the only nation in ASEAN that has both sea and road borders with India, covering 1,643 kilometer. Analysts consider that West Bengal can act as Indian Silk Road to Myanmar, and then to ASEAN.

West Bengal has unique advantage to become a lever to ASEAN connectivity and other East Asian countries by virtue of its economic potential and industrialization. It can catalyze Bengal land for economic and business opportunities between India and ASEAN and other Asian countries. In the wake of China loosing cost competitiveness, resulting the business enterprisers looking for alternatives, West Bengal can provide a propitious land to establish a strong foundation for global value chain (GVC) manufacturing operations between India and ASEAN.

GVC is an unique system to take the advantage of low cost production at multinational level. According to World Bank’s “Global Value Chain Report”, GVC provides opportunities for developing countries to diversify their exports and intensify integrity into global economy. With the rise in GVC model in manufacturing practices, which are component based, world honchos are in search for low cost producing nations and have the advantage of close geographical proximity. The developing countries can produce a slot under GVC, without having to produce a complete and final product. As a result, the developing countries can export mostly manufacturing value –added products. This helped the developing countries to leverage their rapid productivity growth and employment generation, the World Bank report said.

West Bengal, which is considered to be one of the lowest in the cost competitiveness manufacturing place in India and having the advantage of geographical proximity, can act an ideal place for GVC partnerships for businesses in ASEAN and other Asian countries. Like developing countries, West Bengal can offer an unique opportunity to be the hub for exports to ASEAN and other Asian countries in the east for their entrepreneurs, who dependent on multinational GVC operations for manufacturing.
Further, GVC operations can unleash more leg up for low cost manufacturing if the nations in the GVC network are engaged in FTAs.

Japan has been the frontrunner in utilizing the GVC network in ASEAN and other Asian countries to reap the advantage of low cost production. Toyota’s Asian car model is a case in point for successful GVC operations in ASEAN and India. Toyota Motor Company established multinational GVC network for production of strategic components for cars in ASEAN and India. It established diesel press parts and axle manufacturing facilities in Thailand, manual transmission (medium type) and switches in Philippine, engine computer in Malaysia, gasoline engine and door rock in Indonesia and manual transmission (large type) in India  in Bangalore).

One of the attractions for the Japanese company to establish multinational GVC network in ASEAN was AFTA (Asian Free Trade Association). It was launched in 1992 with free and preferential tariff for trade among the ASEAN – 10 countries.

On the similar perception, West Bengal can also be portrayed an important partner for GVC network in ASEAN and other East Asian countries. West Bengal qualified for both low cost competitiveness and low cost logistic operations, having the advantages of geographical proximity, particularly the land connectivity.

In addition, entrepreneurs in ASEAN can reap the benefits of duty preferences, locating their production units in West Bengal, under India- ASEAN FTA arrangements
West Bengal continues to reel under the fever of languishing industrialization despite the Communist government was uprooted six years ago. The initial euphoria of the investors to invest in the State faded, even though not abandoned. Political adversary engulfed the State’s potency for industrialization and the hey day has become a distant future for the State. Given the lackluster situation, West Bengal warrants alignment with ASEAN countries through GVC for revitalization of industrialization. Production of electronic and automobile components are suited for GVC applicability.

Had Tata’s Nano car project in Singur fructified , the industrial map of West Bengal would have been different by now. Till the situation like Tata’s Nano project resurrect, West Bengal’s good days for industrialization depend upon GVC network with ASEAN and East Asian countries.

According to Economic Survey of West Bengal, the State is ahead of many states in establishing strong small scale sector base . And, one of the requirements for GVC partnership is that the it should belong to SMEs (Small and Medium Scale Enterprise) , as it is producing a slot of the final product. In this perspectives, West Bengal can prove an ideal place for manufacturing as Supporting Industry base for the industries in ASEAN.

Besides, West Bengal has a distinct advantage to become a trading hub for India to export to East and South East Asia. Here again, the geographical proximity to Bangladesh, Nepal, Bhutan and Myanmar spur ample opportunities for trading with India’s neighbors. The road connectivity provides enough potential for border trade with these countries. With low cost logistic, border trade unleashes greater opportunities to augment trade with neighboring countries. A larger part of trade with these countries is through border trade. West Bengal is the main entry route for border trade with these countries. Besides, huge volume of unofficial trade flows through West Bengal borders.

Kolkata and Siliguri can serve the main hubs for exporting to these countries across the borders. They can pitch for major inventories and wholesale trading hubs for border trade.

Given the potential of West Bengal, the State can serve India’s Rotterdam for warehousing. The State government should develop SMEs who can take part in GVC manufacturing and infrastructure for warehousing facilities.

In summing up, the verdict of people of West Bengal’s people to support Mamata for second term was to perk up the State’s economic health and generate more employment. In this perspective, the state’s natural advantages should be exploited for revitalization of industrialization.


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Subrata Majumder

Subrata Majumder

Subrata Majumder is an adviser to Japan External Trade Organization (JETRO), New Delhi, and the author of “Exporting to Japan,” as well as various articles in Indian media, including Business Line, Echo of India, Indian Press Agency, and foreign media, such as Asia Times online and Eurasia Review .

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