India’s export economy faces a structural spatial imbalance exposed by recent US tariffs. The tariffs show dependence on a few states while the vast northeast remains economically sidelined. This regional disparity affects national resilience and strategic trade ambitions.
Centralisation of India’s Export Economy
India’s exports are heavily concentrated in four states – Gujarat, Maharashtra, Tamil Nadu, and Karnataka. Together, they contribute over 70% of merchandise exports. Gujarat alone accounts for more than 33%. This concentration results from decades of aligned infrastructure, incentives, and political stability. In contrast, populous states like Uttar Pradesh, Bihar, and Madhya Pradesh contribute less than 5% to exports. This uneven distribution creates vulnerabilities in the national trade framework.
Marginalisation of the Northeast Region
The eight northeastern states, despite sharing over 5,400 km of international borders, contribute a mere 0.13% to India’s exports. The region lacks operational trade corridors and logistical infrastructure. Instead, the focus has been on security and counterinsurgency. Economic institutions shaping export policy exclude northeastern representation. Schemes such as RoDTEP and PLI focus on industrial belts far from the northeast, leaving it without meaningful support to engage global markets.
Impact on Local Economies and Industries
Assam’s tea industry, which produces over half of India’s tea, struggles with stagnant prices and labour shortages. The recent 25% US tariff hike threatens the viability of tea estates. Most tea is low-value, sold in auctions without branding or packaging benefits. Energy infrastructure like the Numaligarh refinery depends increasingly on external crude, including discounted Russian supplies. Any tightening of sanctions or shipping disruptions would severely impact the region’s fragile economy.
Border Trade and Connectivity Challenges
Trade across the India-Myanmar border has declined sharply since the 2021 Myanmar coup. Key border towns like Zokhawthar and Moreh have become securitised bottlenecks rather than trade hubs. Infrastructure projects such as the India-Myanmar-Thailand Trilateral Highway remain incomplete. The scrapping of the Free Movement Regime in 2024 ended traditional cross-border exchanges. The northeast’s borders are now zones of surveillance and control, not commerce and integration.
Geopolitical and Strategic Implications
China’s growing influence in northern Myanmar through investments and alliances contrasts with India’s inertia. India’s eastern frontier is disconnected from its trade ambitions in the Indo-Pacific. The lack of infrastructure and policy focus on the northeast undermines India’s regional leverage. National trade resilience is weakened by overdependence on coastal export hubs. The northeast’s economic marginalisation risks strategic and economic instability along critical borders.
Need for Inclusive Trade Infrastructure and Policy
India’s trade strategy must expand beyond traditional industrial corridors to include the northeast. Basic state functions like roads, warehouses, and logistics are essential. Policies should recognise the region’s geography and economic potential. Integration of the northeast into national and regional trade frameworks is crucial for balanced growth and resilience. Without this, India’s export economy remains fragile and spatially lopsided.
Questions for UPSC:
- Critically analyse the impact of spatial economic imbalances on India’s overall trade resilience with suitable examples.
- Explain the strategic importance of India’s northeastern region in the context of Indo-Pacific geopolitics and trade corridors.
- What are the challenges faced by border trade in conflict-affected regions? How can policy reforms enhance economic integration in such areas?
- Underline the role of infrastructure and institutional representation in shaping regional economic development. Comment on India’s approach towards its northeastern states in this regard.
