From gateway to gridlock: India's Act East policy faces headwinds

Guwahati: Months after the NDA came to power in 2014, Prime Minister Narendra Modi announced the Act East Policy with much enthusiasm. It was a continuation and expansion of the Look East Policy launched by the Congress government in 1992. 

The new policy aimed not only to strengthen trade ties with Southeast Asian nations, as the earlier policy had done, but also to take more action-oriented steps to enhance connectivity, deepen diplomatic engagement, and build stronger security cooperation with the Association of Southeast Asian Nations (ASEAN) and other East Asian countries. A key objective of the Act East Policy was to transform the previously perceived ‘landlocked’ Northeastern region into a gateway for India’s trade, connectivity, and cultural ties with ASEAN nations.

Since then, the Modi government has significantly increased budgetary allocations for the Northeast by 300%, from Rs 36,108 crore in 2014-15 to over Rs 1 lakh crore in 2024-25.  Government data shows more than 10,000 km of highways have been built, eight new airports set up, and over 800 km of railway tracks laid in this period. Connectivity projects to link the Northeast with ASEAN nations via roads and waterways were fast-tracked, with some even becoming operational.

But recent developments in India’s neighbourhood, first the military coup in Myanmar in 2021, then the ouster of the Sheikh Hasina-led government in Bangladesh in July 2024, have cast a shadow over these ambitions. 

Work on major road and railway projects connecting the region to Myanmar and Bangladesh has stalled. Doubts have emerged over key waterway connectivity projects. The ethnic conflict between Meiteis and Kukis in Manipur, ongoing since May 2023, and growing ties between the interim Mohammad Yunus-led government in Bangladesh and China have further raised concerns among both central and state authorities in the Northeast.

With China expanding its influence across South and Southeast Asia, the Act East Policy has become a key strategic priority for India. It is not just about improving trade and connectivity, but about countering China’s growing presence in the region. For the Northeast, the policy offers a pathway to greater economic integration and geopolitical relevance at a time when regional alignments are rapidly changing.

Conflict mars trade

A 110-km road between Manipur’s capital, Imphal, and the border town of Moreh is ready, yet waiting. The Indo-Myanmar Friendship Gates between Moreh and Tamu in Myanmar’s Sagaing province, once symbols of possibility, have remained shut since the Myanmar military launched its crackdown on pro-democracy protesters.

As the conflict between the junta and the People’s Defence Force, the armed wing of Aung San Suu Kyi’s National Unity Government, grew more intense, the flow of people and goods across the border came to a halt. The parallel Meitei-Kuki conflict, which has gripped Moreh and other parts of Manipur since May 2023, only deepened the crisis.

“Business at Moreh has been severely hit. Over 500 shops operated out of here before the conflict. Many have now shut down or moved elsewhere as the gates remain closed and traders from both sides are denied entry,” said Surinder Singh Patheja, secretary of the Border Trade Chamber of Commerce in Moreh. More than 250 traders are part of the trade body. 

“We were very happy when delegates from Thailand and the Philippines visited Moreh a few years ago and showed keen interest in doing more business,” he said. Myanmarese traders would typically purchase vehicle parts, cosmetics, garments, and utensils, while Indian traders mainly sourced food items from Myanmar. Moreh is a Kuki-dominated town, and Meiteis had fled to the Imphal Valley due to the evolving conflict in the region. India had even invested in connectivity projects in Myanmar in order to connect its Northeast with the ASEAN nations, such as Vietnam, Laos, Cambodia, Thailand, via Myanmar.  

To facilitate such interactions, the Modi government, in 2018, introduced the Free Movement Regime (FMR), allowing ethnic communities to move within 16 km on either side of the India-Myanmar border without documents. But this measure was withdrawn in 2024, following demands from the Meitei community, who claimed the FMR was being misused for drug and arms smuggling.

The move sparked discontent among the Nagas, Kukis, and Mizos living along the 1,643-km India-Myanmar border in Manipur, Nagaland, Mizoram, and Arunachal Pradesh. India has sheltered over 30,000 pro-democracy protesters from Myanmar, including MPs and MLAs, but has not acted on demands to reinstate the FMR.

“This is an opportunity for India,” said Patheja. “With China and Thailand also closing their borders with Myanmar, if India steps in to mediate the conflict, it could gain from renewed trade ties.”

Tushar Kanti Chakraborty, president of the All Tripura Merchants Association, told DH that trade through Tripura’s border with Bangladesh has nearly stopped since the Hasina government’s fall in July last year. “Except for the Hilsa fish and a few other food items, India is not importing much from Bangladesh now. The traders in Tripura are angry over the anti-India stand taken by the interim government in Bangladesh,” Chakraborty, who is also an advisor of an Indo-Bangladesh trade body, said. 

Border haats — weekly markets meant to foster cross-border trade and people-to-people ties — have also shut down. Manik Laskar, a trader in Tripura, said he has been jobless since the haat at Kamalasagar-Tarapur was closed, first during the Covid pandemic, then after Hasina’s ouster. “The bigger loss was for Indian traders who sold cosmetics, fruits, garments, and steel products,” he said.

Projects on hold

Union Minister for Shipping and Waterways and former chief minister of Assam, Sarbananda Sonowal, recently said that connectivity projects since 2014 have boosted the Act East Policy. But on the ground, work on the rail and road projects initiated to connect Manipur with Myanmar and Tripura, and Assam with Bangladesh has come to a halt while uncertainty prevails over the waterway projects. 

“The highway to Moreh is ready, but roads inside Myanmar, including Tamu, are in poor condition. India was to construct part of the highway inside Myanmar, but the work has halted due to the conflict,” said Patheja.

An official in the BJP-led Tripura government told DH that the 12.24km rail line that was planned to connect the Tripura capital, Agartala, with Akhaura in Bangladesh was supposed to be operational this year. But work stopped after the Hasina government was ousted. In fact, the trains between Kolkata and Dhaka, which ran earlier, had also been stopped soon after. According to officials, train connectivity between Kolkata and Tripura via Bangladesh, bypassing the Siliguri route, will reduce travel distance and cost by half. 

Similarly, the Sittwe Port in Myanmar, which was partially inaugurated in May 2023 as part of the Kaladan Multi-Modal Project to link Mizoram to the sea, is yet to become operational due to the conflict between the rebels and the army. “We are trying hard for its full operationalisation,” said Santanu Thakur, the Union Minister of State for Shipping and Waterways. Transporters are also reluctant to move cargo from eastern Indian states to the Northeast via the Indo-Bangladesh Protocol Route, reopened during Hasina’s tenure. This is partly due to the ‘anti-India stance’ of the Yunus government in Bangladesh, an official in the shipping ministry said. 

Direct air links between Dhaka and Guwahati, Dhaka and Agartala, and Imphal and Mandalay (Myanmar) have not taken off. Currently, Guwahati has direct (but non-daily) flights only to Bhutan and Bangkok. Proposals for air links with other ASEAN capitals remain unfulfilled.

Chinese hegemony

Government officials said the developments in Myanmar and Bangladesh have also upset another major objective of the Act East Policy — to strengthen India’s strategic ties with the ASEAN nations and thereby counter China’s clout in the region.

Amid India’s constant efforts to project the Northeast as a gateway to the ASEAN region, Mohammad Yunus, the chief of interim government in Bangladesh dropped a shocker in April when he projected the country as the ‘guardian of the sea’ while inviting China and Chinese companies to set up business units and push investments in his country. 

Yunus also described the seven states of the Northeast as a ‘landlocked’ region. “So this opens up a huge possibility. This could be an extension of the Chinese economy. Build things, produce things, market things, bring things to China, bring them out to the rest of the world,” Yunus said. 

Yunus’s invitation to China into Bangladesh angered many in India’s Northeast. Assam CM Himanta Biswa Sarma said this comment echoed long-standing concerns about India’s vulnerability in the Siliguri Corridor (also known as the Chicken’s Neck), a narrow 22-km-wide strip connecting the Northeast to the rest of India. 

Bangladesh’s vision of making the region an extension of the Chinese economy is dangerous, warned author and journalist Rajeev Bhattacharyya, in April this year. “China is not a friend of India. Its greater role in Bangladesh will not help India’s interests,” he said.

Former Union Minister Rajkumar Ranjan Singh from Manipur wrote to PM Modi in June, warning that China is pursuing a strategy of ‘strategic encirclement’ around India’s Northeast, including through investments and diplomacy in Myanmar, Bangladesh, Nepal, and Bhutan.

“In the context of India’s Northeast, this manifests through military, economic and diplomatic manoeuvres in neighbouring countries like Myanmar, Bangladesh, Nepal, and Bhutan, all of which border Northeast India. For China, it is part of a broader String of Pearls strategy, creating a network of assets (ports, roads, bases, and allies) around India. Further, China has been strengthening its ties with India’s neighbouring countries through investment and diplomatic engagements. Chinese influence in and around the Northeastern region should be countered properly in all respects,” he said. 

The way forward

As hopes of connectivity with Myanmar and Bangladesh, and the rest of the ASEAN countries fade, the Indian Railways is now expediting a 69-km rail line linking Assam’s Kokrajhar to Gelephu in Bhutan.  A detailed project report for the Rs 3,500 crores railway project was recently presented. A rail line between Gelephu in Bhutan and Kokrajhar, the headquarters of Assam’s once militancy-hit Bodoland region, will be the first in the Himalayan nation. Assam CM Himanta Biswa Sarma suggested that the Centre should also try for a parallel connectivity route via Bhutan for the Northeastern region and the rest of India. 

Sanjeeb Kakoty, a professor at the Indian Institute of Management (IIM), Shillong, said the developments in Myanmar and Bangladesh are a wake-up call for India to work fast, decisively and with foresight to wrest back the initiatives taken under the Act East Policy.

“India needs to put together a strategic plan to not only counter the inimical forces but also put in place a comprehensive ‘Neighbourhood First’ policy to ensure strong friendships with the neighbouring countries. The initial euphoria and momentum of the shift from Look East to Act East seems to have greatly evaporated. Forces inimical to India’s interest have grown deep roots in our neighbourhood,” he said. 

“The shared culture and heritage and the symbiotic economic ties that our Northeastern region shares with its neighbours have not been capitalised. The extension of soft power initiatives, be it in the sectors of healthcare, education, skilling, or even creating a cooperative approach to meeting ecological challenges, could be a good starting point. This will give us geo-political and economic dividends down the road,” Kakoty, also a writer and a documentary filmmaker, said.