Place-based Industrial Policy and Changes in the Manufacturing Sector in North-East India

Abstract

Place-based or location-based policies are policy instruments used in addressing the challenges of economic inequalities and disparities across underperforming areas and disadvantaged regions. The eight states in North-East India (NEI) are behind other states in various spheres of economic development, particularly in terms of their contribution to India’s manufacturing sector. Based on the data from Annual Survey of Industries at disaggregated (two-digit) level, this study examines the changes in the manufacturing landscape in the region during the period of implementation of place-based industrial policy from 1997–1998 to 2016–2017. Using structural ratios and technical coefficients, location quotient and kinked exponential model, the study presents the changing profile of manufacturing industries in the region for the period under study. The performance of NEI’s manufacturing sector is explained in terms of rising capital intensity, falling employment and increased labour productivity. Though there is a visible shift from industries manufacturing food products towards chemicals and non-metallic minerals, the region’s industrial base remains less diversified and lacks capital goods production.