Gateway Bengal
Bengal’s strategic location be a pivot to realising the Act Asia Policy.
12 Nov 2017 4:27 PM GMT
West Bengal's geopolitical situation has a distinct advantage which makes it possible for it to become the gateway to East and South East Asia. Its geographical proximity to eight states of the North-East and four nations (Bangladesh, Bhutan, Nepal, and Myanmar) opens up ample opportunities to become the grandstand for Act Asia policy. Its land proximity to the North-East can act as a potential axis for the North-East – Myanmar connectivity, which emerged as 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 which has both sea and road borders with India, covering 1,643 kilometres. Analysts believe that West Bengal can act as the Indian Silk Road to Myanmar, and then to ASEAN.
West Bengal has a unique advantage to become a lever to ASEAN connectivity and other East Asian countries by virtue of its economic potential and industrialisation. It can catalyse Bengal for economic and business opportunities between India and ASEAN and other Asian countries. In the wake of China losing its cost competitiveness, resulting in business enterprises looking for alternatives, West Bengal can provide a propitious land to establish a strong foundation for the global value chain (GVC) manufacturing operation between India and ASEAN.
GVC is a unique system to take advantage of low-cost production. According to World Bank's "Global Value Chain Report", GVC provides opportunities for developing countries to diversify their exports and intensify integration with the 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 which 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. Thus, these countries can export mostly manufacturing value-added products. This will help the developing countries to leverage their rapid productivity growth and employment generation, the World Bank report said.
West Bengal, which is considered as a manufacturing option being one of the lowest in cost competitiveness in India and having the advantage of geographical proximity, can act as an ideal place for the GVC partner for honchos in ASEAN and other Asian countries. Like developing countries, West Bengal can offer a unique opportunity to be the hub for exports in the east for their entrepreneurs, who depend on multinational GVC operations for manufacturing. Further, GVC operations pitch more for low-cost manufacturing, provided it is established in the nations where they are engaged in FTAs.
Japan has been the frontrunner in utilising GVC operations in ASEAN and other Asian countries to reap the advantage of low-cost production after it was shrugged off from cost competitiveness due to Japanese yen appreciation, in the end of the 1980s. Toyota's Asian car model is a case in point for successful GVC operations in ASEAN and India. Toyota Motor Company established multinational GVC operations for the 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 the Philippines, engine computer in Malaysia, gasoline engine and door lock in Indonesia and manual transmission (large type) in India (in Bangalore).
One of the attractions for the Japanese company to establish multinational GVC operations in ASEAN was the AFTA (Asian Free Trade Association) between the ASEAN countries. It was launched in 1992 with a free and preferential tariff for trade among the ASEAN countries.
On a similar perception, West Bengal can also be portrayed as an important partner for GVC operations in ASEAN and other countries in East Asia. West Bengal qualified for both low-cost competitiveness and low-cost logistic operations, having the advantages of geographical proximity, particularly land connectivity.
West Bengal continues to reel under the fever of languishing industrialisation despite the uprooting of the Communist government, six years ago. The initial euphoria of investors to invest in the state faded, though not abandoned. Political conditions engulfed the state's potency for industrialisation. Given the situation, West Bengal warrants alignment with ASEAN countries through GVC for the revitalisation of industrialisation. Production of electronic and automobile components is more 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 propitious situation like Tata's Nano project resurrects, West Bengal's good days for industrialisation depend upon GVC prosperity.
According to Economic Survey of West Bengal, the state is ahead of many others in establishing a strong small-scale sector base. And, one of the requirements for GVC partnership is that it should belong to SMEs (Small and Medium Scale Enterprise), as it is producing a slot of the final product. In this perspective, West Bengal can prove to be an ideal place for manufacturing as a 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. The road connectivity provides enough potential for border trade with these countries. With low-cost logistics, border trade unleashes greater opportunities to augment trade with neighbouring countries. A larger part of the trade with these countries is through border trade.
West Bengal is the main entry route for border trade with these countries. Besides, a huge volume of unofficial trade flows through West Bengal borders. Kolkata and Siliguri can serve as the main hubs for exporting to these countries across the borders. They can pitch for major inventories and wholesale trading for border trade.
Given the potential of West Bengal, the state can serve as a major stakeholder in Japanese GVC operations in ASEAN and East Asia and India's Rotterdam for warehousing. The state government should develop SMEs, which can take part in GVC manufacturing and infrastructure for warehousing facilities.
Thus, West Bengal's verdict for a second term to Mamata was to perk up the state's economic health. Economic development will bring back job creation in the state, which is plagued by languishing industrialisation.
(The views expressed are strictly personal.)
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