By K N Kumar
Muhammad Yunus, Bangladesh’s interim leader, recently ignited a diplomatic fire during his visit to China. Describing India’s Northeast as “landlocked” and positioning Bangladesh as the region’s “only guardian of the ocean,” he provocatively suggested that Bangladesh could serve as an extension of the Chinese economy, inviting Beijing to “build things, produce things, market things” through Dhaka. These remarks, made at a Beijing roundtable, drew immediate and strong condemnation from India, including Assam’s Chief Minister Himanta Biswa Sarma, who labelled them as “offensive.” I had hoped for reactions from other state Chief Ministers to support him, but didn’t come across any. Yunus’s statements, coupled with Bangladesh’s reported plans to revitalise the Lalmonirhat airbase (just a two-hour drive from Siliguri) with Chinese investment, have raised serious alarms about China’s deepening influence in India’s strategic backyard. China’s persistent claims over Arunachal Pradesh as “South Tibet,” its aggressive dam construction on the Brahmaputra River, and its expanding military infrastructure along the Line of Actual Control (LAC) pose direct and formidable threats to the Northeast. The Brahmaputra dams, for instance, have the potential to disrupt agriculture and power generation in downstream regions of Assam and Bangladesh.
In a retaliatory move, India terminated a transhipment facility for Bangladeshi exports to disrupt Bangladesh’s trade with Bhutan, Nepal, and Myanmar. This geopolitical play will continue, but we should, for the present, focus on the Northeast’s need to develop defence ancillary industries and reduce reliance on external routes like Bangladesh’s Chittagong port. My premise in this article is to urge the state governments to realize the manufacturing opportunities in the defence sector that can have a transformative effect on the NER’s economy while doing their bit for national security.
I believe that these geopolitical developments, notably comments from Bangladesh’s interim leader Muhammad Yunus and China’s continued assertive posture, are a wake-up call for the northeastern states. Sharing borders with China, Myanmar, Bangladesh, and Bhutan, the Northeast is not merely a frontier but a critical region for national security. Embedded in this challenging situation, however, lies a great opportunity for economic growth. China’s regional ambitions are aimed at countering India’s growing geopolitical leverage, particularly through the Act East Policy, which seeks to transform the Northeast into a vibrant gateway for trade with ASEAN nations. By developing defence ancillaries locally, India can effectively counter some of these threats, ensuring both economic and strategic resilience.
The 2020 Galwan Valley clashes highlighted the repercussions of logistical delays, highlighting the need for defence production within the northeast. By establishing ancillary defence industries in states like Assam, Arunachal Pradesh, Meghalaya, Nagaland, and Manipur, India can drastically reduce its reliance on distant defence manufacturing hubs like Bengaluru, Nashik, Hyderabad, etc. A FICCI report (2023) indicates that producing drone components in Guwahati, rather than shipping them from southern India, could yield savings of up to 30% in logistics costs, while ensuring faster mobilization during critical situations. Another CII study (2024) highlights that local production of ancillary defence components could cut logistics expenses by 25-35% compared to shipping from southern or western India. Furthermore, the region’s connectivity to Southeast Asia positions it as a promising export hub, with markets in Myanmar and Thailand. India will benefit immensely from achieving its ambitious $5 billion defence export target by 2025.
I want to look beyond the region’s strategic significance and focus on presenting a few economic arguments that, to my mind, are compelling: (1) The defence industry, renowned for its exacting standards of quality and precision, naturally generates skilled, well-paying jobs. A single ancillary unit can employ hundreds, ranging from highly qualified engineers to skilled technicians, while simultaneously spurring growth in crucial supporting sectors like logistics and maintenance. A 2022 NITI Aayog study estimates that every direct defence job generates an additional 2.5 indirect jobs, which is a significant boon for a region facing considerable unemployment challenges, such as Assam’s 8% rate in 2023, according to CMIE. (2) Unlike large-scale defence manufacturing, ancillary units typically require less initial capital, making them more accessible to promising startups and Small and Medium-sized Enterprises (SMEs). (3) To catalyse this growth, the Assam Aerospace & Defence Policy 2023 offers attractive incentives, including up to 50% subsidies on land and machinery, with an ambitious goal of attracting Rs 10,000 crore in investments and creating 50,000 jobs by 2030. (4) IIT, Guwahati is actively collaborating with DRDO, driving innovation through projects such as bamboo-based drone frames and AI-powered surveillance systems. Startups like Bamboo Innovations Pvt. Ltd. in Guwahati, which secured a ₹5 crore DRDO contract in 2024, and a Nagaland-based unit currently testing communication devices for the Indian Army, exemplify the region’s entrepreneurial spirit and its potential to contribute directly to national security.
It is not my case that there are no challenges. Infrastructure gaps, such as an inconsistent power supply (only 30% of Northeast districts have reliable industrial power) and limited industrial estates, will hinder rapid growth. Access to capital remains another significant hurdle, with Northeast startups receiving less than 2% of India’s total venture funding. Furthermore, specialised skills in aerospace-grade manufacturing are still developing, necessitating targeted training programmes. My simple answer to all these questions: Begin somewhere.
However, significant progress is already evident. Over Rs 1.5 lakh crore has been invested in Northeast infrastructure since 2014, encompassing a vast network of highways, vital rail links, and advanced 5G networks. Targeted training programmes are being conducted in collaboration with DRDO, and various universities are actively equipping the region’s youth with essential skills in advanced manufacturing and cybersecurity. I learnt that a Northeast Defence Innovation Hub in Shillong is proposed, though I am not aware of what it is all about, or its current status.
A Call to Action: At the heart of this transformative journey lies the youth of the Northeast. The defence sector provides an unparalleled canvas for entrepreneurship, where startups can develop innovative products such as eco-friendly packaging derived from tea waste or smart textiles for soldiers. These ventures not only create essential jobs but also ingeniously utilise the region’s unique resources—including bamboo, jute, and the skills of local artisans—to produce high-value, specialised products. Making the Northeast a defence manufacturing hub aligns seamlessly with India’s broader ambition to become a global defence exporter. Its strategic proximity to Southeast Asia, coupled with deep-rooted cultural ties, positions it as a vital bridge to emerging markets like Thailand and Vietnam. The Act East Policy further reinforces this vision, transforming the Northeast from a historically peripheral region into a dynamic geopolitical hub. By actively countering China’s regional influence and simultaneously reducing dependence on external routes, the Northeast can unequivocally strengthen India’s standing in the Indo-Pacific.
With sustained government support, the relentless spirit of youthful innovation, and the urgency of current geopolitical shifts, the region is poised to emerge as a formidable defence and ancillary hub. For its vibrant youth, this presents an unprecedented opportunity to build enterprises that truly matter, create jobs that empower communities, and contribute directly and meaningfully to India’s national security. The time to act decisively is now. What beats me is why Meghalaya, or for that matter, any hill state of the NER, has yet to come up with any policy to establish defence ancillary industries in their respective states. Why can’t we establish a Defence & Aerospace Economic Zone in relatively underpopulated areas of the state/NER, where barren and infertile lands abound? More importantly: Why isn’t there a Meghalaya Aerospace & Defence Policy? Why?
The writer is former IAS officer of the Assam-Meghalaya cadre