Content

1. The North East: Where the Sun of Development Rises
2. GST Reforms in MSME

The North East: Where the Sun of Development Rises

The North East in India’s Development Map

• Geographical Identity: Comprises 8 states – Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.
• Strategic Location: Gateway to Southeast Asia; shares international borders with China, Bhutan, Myanmar, Bangladesh.
• Historical View: Long perceived as a remote “frontier region” with limited integration into mainstream development.
• Transformation Framework: Shift under “Act East Policy” and “EAST vision” (Empower, Act, Strengthen, Transform).

Relevance : GS2 (Governance, Policy, India’s Act East Policy) and GS3 (Infrastructure, Investment, Inclusive Growth, Internal Security).

Infrastructure Push

Railways

• ₹62,477 crore allocated to NE railways since 2014 (5x increase).
• ₹77,000 crore worth projects underway.
• Bairabi–Sairang line (Mizoram)
  • 51 km line, ₹8,000 crore cost.
  • Connects Aizawl to national rail grid for first time.
  • Engineering marvel: 143 bridges, 45 tunnels (bridge taller than Qutub Minar).
  • Boosts freight (bamboo, horticulture), tourism, jobs.
• New trains: Sairang–Delhi (Rajdhani), Sairang–Kolkata (Mizoram Express), Aizawl–Guwahati (Intercity).
• Strategic projects: Jiribam–Imphal, Dimapur–Kohima lines; 17 new surveys covering 1,790 km.

Roads & Highways

• 16,207 km National Highways built till July 2025.
• Example: Mangaldoi–Mazikuchi (15 km, ₹45.3 crore, NESIDS).
• Aizawl Bypass (45 km, ₹500+ crore, PM-DevINE) to decongest traffic.
• Chhimtuipui River Bridge for Kaladan Multimodal Transit → cross-border trade with Myanmar.

Rural Connectivity (PMGSY)

• Sanctioned: 89,436 km roads, 2,398 bridges.
• Completed: 80,933 km roads, 2,108 bridges.
• Major improvement in last-mile connectivity in hilly & remote areas.

Air Connectivity (UDAN)

• Regional airports & heliports linked; previously underserved/unserved regions connected.
• Enhances tourism, business travel, medical access.

Digital Connectivity

• BharatNet & Digital Bharat Nidhi expanded to Gram Panchayats.
• Mobile towers commissioned across region.
• Facilitates e-governance, telemedicine, online education, and start-up ecosystem.

Government Schemes Driving Transformation

• PM-DevINE (2022–26): ₹6,600 crore; funds infra + social dev; supports youth & women.
• NESIDS (Roads): Launched 2017–18; extended till 2026; gap-funding for roads/bridges not covered elsewhere.
• NESIDS-OTRI: Non-road infra (health, education, aviation, telecom, water); 29 projects, ₹462.2 crore spent (till July 2025).
• NEC Schemes: Focus on bamboo, piggery, tourism, higher education, tertiary health, livelihoods.
• Special Packages: Assam (₹4,000 crore for 2025–30), Tripura (₹250 crore for 2025–29) → peace, stability, skill development, local economy boost.

Rising Northeast Investors Summit 2025

• Investment interest: ₹4.48 lakh crore.
• Sectors: energy, agro-processing, textiles, healthcare, IT, entertainment, logistics.
• States facilitating investment: single-window clearances, land banks, eco-friendly projects.
• Direct benefits: job creation, industrial hubs, youth entrepreneurship.

Governance & Transparency

• Poorvottar Vikas Setu (PVS) Portal:
  • Digital platform for proposal submission, approvals, fund releases.
  • Cuts delays, ensures transparent monitoring.
  • Central–State coordination improved.

Fiscal Impact

• Record budgetary allocations for NE post-2014.
• Integrated planning under PM Gati Shakti framework.
• Convergent funding across ministries (Railways, MoRTH, Civil Aviation, DoNER).

Strategic & National Importance

• Gateway to Act East Policy: Enhances connectivity with Myanmar, Bangladesh, ASEAN.
• Security Angle: Road/rail infra aids troop movement in border areas.
• Cultural Integration: Linking NE communities to rest of India strengthens national identity.
• Tourism Potential: Eco-tourism, cultural circuits, adventure tourism.
• Resource Utilization: Bamboo, hydropower, horticulture exports facilitated.

Challenges Ahead

• Difficult terrain → cost overruns, engineering challenges.
• Insurgency & law-and-order concerns in pockets.
• Need for balancing development vs ecological fragility.
• Inclusion of remote tribal areas in decision-making.
• Ensuring jobs for locals from large-scale investments.

Conclusion: The Road Ahead

• NE is transitioning from frontier to front-runner of growth.
• Holistic approach combining connectivity, investment, livelihood, governance reforms.
• With infrastructure, digital access, and inclusive development, the region is becoming a key driver of Viksit Bharat 2047 vision.

GST Reforms in MSME

Basics: GST and MSMEs

• Goods and Services Tax (GST): Indirect tax regime introduced in July 2017, subsuming multiple central and state taxes.
• MSMEs (Micro, Small & Medium Enterprises): Backbone of Indian economy, contributing ~30% to GDP, 45% to exports, and employing ~11 crore people.
• Challenges for MSMEs under GST (pre-reform):
  • Higher tax rates on raw materials → costlier production.
  • Inverted duty structures → refunds delayed, working capital stress.
  • Compliance burden → filing multiple returns.
• Rationale for Reform (2025):
  • Align with flagship schemes – Make in India, PM Gati Shakti, Aatmanirbhar Bharat, PMAY.
  • Lower input costs, reduce inflation, improve competitiveness.
  • Targeted support to labour-intensive sectors (textiles, handicrafts, toys, leather, logistics, food).

Relevance : GS3 (Economy, Employment, MSME sector, Inclusive Growth, Government Policies & Reforms)

Sector-wise GST Rationalisation & Impact

Automobiles and Transport

• GST cut on two-wheelers, cars, buses, tractors → stimulates demand.
• Tractors (<1800 cc): GST reduced to 5% → supports farmers + boosts India’s tractor export leadership.
• Commercial vehicles (trucks, vans): 28% → 18% → lowers logistics cost, inflation, supports MSME truck operators.
• Buses (10+ seats): 28% → 18% → affordable public transport, benefits workers & schools.
• Multiplier Effect: MSMEs in tyres, batteries, plastics, glass benefit from higher demand.

Food and Dairy

• Basic food items: GST 12–18% → 5% or NIL → relief for processors, SHGs, dairy cooperatives.
• Dairy: Milk/paneer NIL; butter/ghee 12% → 5% → nutrition security + women-led dairy MSMEs.
• Confectionery (chocolates, cakes): cheaper → boosts small sweet makers.
• Diabetic foods: 12% → 5% → supports healthcare needs.
• Dried fruits, fish products, milk-based drinks: 12% → 5% → healthier diets + agro-MSME push.

Textiles, Apparel, Leather

• Man-Made Fibres: 12% → 5% → corrects inverted duty structure, helps exporters.
• Readymade garments: 5% slab limit expanded from ₹1,000 to ₹2,500 → demand surge in Tier-2/3 towns.
• Leather/footwear (<₹2,500): 12% → 5% → relief for tanneries, small footwear manufacturers.
• Employment: Boosts jobs, especially for women in stitching, tailoring, apparel.

Housing & Construction Materials

• Cement: 28% → 18% → reduces housing costs under PMAY, generates jobs in mining & logistics.
• Bricks job work: 12% → 5% → relief for rural housing, brick kiln MSMEs.
• Boards (cement/jute): 12% → 5% → cheaper prefab houses.
• Marble, granite: 12% → 5% → strengthens local stone industry.
• Agro-based wood products (bamboo flooring, husk boards): 12% → 5% → eco-friendly housing, MSME growth.

Handicrafts & Creative Industries

• Handicrafts: 12% → 5% → idols, paintings, terracotta, tableware → boosts artisans’ incomes.
• Toys & sports goods: 12% → 5% → supports “Vocal for Local”, reduces import dependence.

Logistics, Packaging, Sustainability

• Packaging (paper, cartons, crates): 12% → 5% → cuts e-commerce/logistics costs.
• Biodegradable bags: 18% → 5% → promotes sustainable start-ups, reduces plastic use.
• Logistics Competitiveness: India’s World Bank LPI rank improved from 54 (2014) to 38 (2023); GST reforms reduce costs further, aligning with supply-chain digitization & Gati Shakti.

Tourism & Hospitality

• Hotels <₹7,500/day: 12% → 5% → boosts budget tourism, mid-segment hotels.
• Tourism GDP share: 1.5% (2020–21) → 5.22% (2023–24 provisional).
• GST cut expected to push further growth in domestic & international tourism.

Broader Impacts

• For MSMEs:
  • Reduced input costs & working capital stress.
  • Lower compliance → easier scaling up.
  • Level playing field vs large corporates.
• For Employment:
  • Labour-intensive industries (garments, leather, handicrafts) benefit.
  • Women entrepreneurs in textiles, dairy, tailoring gain new opportunities.
  • Rural informal sector (brick kilns, food processing, packaging units) integrated.
• For Consumers:
  • Lower retail prices → improved affordability across essential & lifestyle goods.
  • Higher demand → multiplier effect on jobs.
• For Economy:
  • Strengthens domestic value chains.
  • Promotes exports via competitive pricing.
  • Supports Aatmanirbhar Bharat & Viksit Bharat 2047 vision.

Challenges & Considerations

• Potential short-term revenue loss for states (to be offset by higher demand + formalisation).
• Need to ensure timely refunds & compliance simplification for MSMEs.
• Balancing tax cuts vs fiscal consolidation.
• Monitoring pass-through of benefits (ensuring industries actually lower prices for consumers).

Conclusion

• GST reforms (2025) are pro-MSME, pro-employment, pro-consumer.
• They align taxation with Make in India, PMAY, Gati Shakti, Aatmanirbhar Bharat.
• By correcting inverted duty structures, lowering costs, and making goods affordable, they create a more competitive, resilient, and inclusive economy.
• MSMEs, as the largest job creators, will be central to India’s Viksit Bharat 2047 journey through these rationalised GST policies.