How road construction has helped North-East hit the fast lane of growth

The North-East, once regarded as a cul-de-sac because of poor accessibility and difficult terrain, is emerging as one of the fastest-growing regions for not only e-commerce firms but also transporters and logistic outfits.

Construction of roads seems to have fuelled demand as well as smoothed supply bottlenecks in the North-Eastern States.

Retail demand

“Construction of roads necessitated large-scale acquisition of land, which in turn brought disposable income among the local people, boosting retail demand,” said Pirojshaw Sarkari, CEO of Mahindra Logistics, which has seen its business surge significantly from the region. Mahindra Logistics, which is sprucing up its warehousing infrastructure in Kolkata and Guwahati to cater to the growing demand in the region, knows that its peer companies are benefiting too.

Logistics service provider Venture Express is looking to expand its short-distance movements in the range of 100-300 km in Assam and service smaller cities such as Nagaon, Dimapur, Tinsukia, Dibrugarh and Silchar.

Land acquisition costs

Amounts spent on land acquisition for road construction have been increasing in the North-Eastern States in last few years. Between April and November 2017 alone, National Highways and Infrastructure Corporation Ltd (NHIDCL) disbursed ₹140.51 crore in Arunachal Pradesh; ₹54 crore in Sikkim and ₹51 crore in Mizoram, according to the Road Transport and Highway Ministry.

What is helping a boom in logistics and transport business in the North-East is the subsidies and tax breaks in States such as Assam and Sikkim, which have led to the setting up of more manufacturing facilities there in the last few years.

Deepak Garg, CEO and founder of Rivigo, a homegrown logistics start-up, pointed out that there has been a recent uptick in transport demand from Assam after several factories getting established in the State.

“Earlier, the North-East was seen only as a consumption centre. Now, lots of FMCG factories are coming up in Assam with the Centre introducing subsidies,” said Garg. This means the States are now emerging as a source for products getting manufactured there, creating business opportunities for transporters and logistics firms alike.

E-commerce growth

In the last few years, the North East has emerged as a fast-growing region delivering double-digit growth for e-commerce firms such as Amazon, Flipkart, Jabong, Myntra, Lenskart.

Part of the growth stemmed from the pent-up demand of a young chic population which was not being met through physical presence of branded retail store chains there. Many branded stores have traditionally shied away from creating dense chain of outlets in the region which has a thinly spread population on a hilly and tough terrain.

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