Changing India’s neighbourhood gaze using two Ts

A LinkedIn post from Godrej executive Sudhir Sitapati prompted this essay. At a time when concern about India’s neighbourhood has heightened again following intense friction between India and Pakistan, and India and Bangladesh, there is a need to reimagine what a neighbourhood really means.

India is at a critical moment where the changing nature of its neighbourhood and the broader Indo-Pacific region require a strategic recalibration of its foreign policy. In this essay I use two examples from two extremities - Tamil Nadu and Tripura - to try and examine how India can significantly enhance its regional influence and unlock substantial economic possibilities by strategically leveraging the unique strengths and geographical advantages of its federal states. The southern state of Tamil Nadu, with its formidable economic prowess, and the northeastern state of Tripura, with its strategic location as a gateway to Southeast Asia, serve as compelling examples of how state-level initiatives can be instrumental in forging a reimagined, economically vibrant neighbourhood policy.

The Case For Tamil Nadu

Tamil Nadu has firmly established itself as one of India's leading economic powerhouses. In FY 2023-24, its Gross State Domestic Product (GSDP) reached approximately $327.95 billion, with a real economic growth rate of 8.33%. The state’s per capita income in 2022-23 stood at ₹2.78 lakh, 1.6 times the national average, and for 2023-24, its per capita GSDP is estimated at $4,068. This economic dynamism is further reflected in its sectoral composition: services (53.63%), industry (33.37%), and agriculture (13%) in 2023-24. Tamil Nadu contributes significantly to India's manufacturing GDP (around 12%) and leads in the number of operational factories, particularly in automobiles, textiles, leather goods, and increasingly, electronics. The state has an ambitious vision to become a $1 trillion economy by 2030.

• Table 1: Economic Profile of Tamil Nadu (FY 2023-24)

Indicator	Value (FY 2023-24)
GSDP (Current Prices)	₹27.22 lakh crore (~$327.95 Bn)
GSDP Growth Rate (Real)	8.33%
Per Capita GSDP (Nominal USD)	$4,068
Sectoral Contribution to GSVA (Primary)	13%
Sectoral Contribution to GSVA (Secondary)	33.37%
Sectoral Contribution to GSVA (Tertiary)	53.63%

However, this ambition faces fiscal challenges, notably high subsidy expenditure, which was budgeted at ₹1.47 lakh crore for 2024-25, potentially crowding out productive investments needed for its $1 trillion goal.

Comparatively, Tamil Nadu's nominal per capita GDP of $4,068 (FY24) positions it favourably against India's average ($2,485-$2,550 for 2023) and aligns it with Southeast Asian nations like Vietnam ($4,324 in 2023) and Indonesia ($5,108.9 in 2023), though Malaysia ($13,942.6 in 2023) remains significantly ahead. In Purchasing Power Parity (PPP) terms, Tamil Nadu's derived per capita GSDP for FY24 is approximately $19,389, comparable to Vietnam's ($17,350) and Indonesia's ($17,520) for 2023, indicating a similar standard of living.

As India's third-largest exporting state, Tamil Nadu contributed nearly 10% to India's merchandise exports in FY24, valued at $43.6 billion. The state aims for $100 billion in exports by 2030. Electronics exports have seen explosive growth, reaching $9.56 billion in FY24, accounting for over 32% of India's total electronics exports. The automotive sector also remains strong, with major ports handling approximately 380,000 vehicle exports in FY23. This export prowess is supported by three major ports (Chennai, Kamarajar, V.O. Chidambaranar) and numerous Special Economic Zones (SEZs). The Tamil Nadu Export Promotion Strategy 2021 outlines initiatives to enhance infrastructure, diversify exports, and develop districts as export hubs.

• Table 2: Tamil Nadu's Key Merchandise Exports (FY 2023-24)

Major Export Commodity	Export Value (USD Billion)	% Share of TN's Total Merchandise Exports (approx.)
Electronic Goods	$9.56	21.9%
Ready-Made Garments (Textiles)	$4.69	10.8%
Leather & Leather Manufactures	$1.66	3.8%
Cotton Yarn/Fabrics/Made-ups, Handloom etc.	$2.06	4.7%
Fish Products	~$0.825 (₹6,854 Cr)	~1.9%

(Note: Percentages are calculated based on TN's total merchandise export of $43.6 billion in FY24.)

To maximize its potential, Tamil Nadu must strengthen innovation, enhance logistics, pursue targeted skill development, engage proactively internationally, ensure fiscal sustainability, and optimize its SEZs and industrial corridors.

A Strategic Gateway Called Tripura

Tripura's geostrategic location, sharing an 856-km border with Bangladesh and proximity to Myanmar, makes it a natural land bridge to Southeast Asia, crucial for India's Act East and Neighbourhood First policies. However, its trade with Bangladesh is heavily imbalanced. In FY 2023-24, imports from Bangladesh were ₹703.67 crore, while exports were a mere ₹12.31 crore, a sharp decline from previous years. This imbalance, despite multiple Land Custom Stations (LCSs) and Integrated Check Posts (ICPs), points to a limited export basket, lack of local processing facilities, and recent trade frictions.

• Table 3: Tripura's Trade with Bangladesh (FY 2023-24)

Indicator	Value (FY 2023-24)
Total Trade Value	₹715.98 crore
Import Value from Bangladesh	₹703.67 crore
Export Value to Bangladesh	₹12.31 crore

The Shillong-Silchar highway (NH-6) project, a 166.8 km four-lane corridor targeted for completion by 2030, is set to transform regional connectivity. It will reduce travel time between Shillong and Silchar from 8.5 to 5 hours and, crucially, link to the Kaladan Multi-Modal Transit Transport Project (KMMTTP), creating an alternative land-sea route from Kolkata to the Northeast via Myanmar, bypassing Bangladesh and the vulnerable Siliguri Corridor.

The KMMTTP involves a sea journey from Kolkata to Sittwe port (Myanmar), inland waterway transit to Paletwa, and a road link to Zorinpui in Mizoram, connecting to India's highway network. While Sittwe port and the waterway are largely complete, the Paletwa-Zorinpui-road link faces delays due to difficult terrain and security issues in Myanmar, with the Arakan Army controlling key areas. This project is a geopolitical imperative, offering a shorter route to the Northeast and reducing reliance on Bangladesh, but its success hinges on navigating Myanmar's internal conflicts.

Local connectivity projects like the Agartala-Akhaura Rail Link (inaugurated Nov 2023) and the Maitri Setu bridge over the Feni River (inaugurated Mar 2021) aim to enhance direct links with Bangladesh, providing access to Chittagong Port. However, both remain largely non-operational due to incomplete ancillary facilities and the unfavourable political climate in Bangladesh. These last-mile operationalization hurdles, compounded by bilateral trade frictions, highlight systemic challenges in cross-border infrastructure projects.

• Table 4: Key Connectivity Projects for Tripura

Project Name	Current Status (Early 2025)	Key Challenges
Agartala-Akhaura Rail Link	Inaugurated Nov 2023; Idle, awaiting full operationalization	Delayed operationalization; Bilateral coordination; Political climate in Bangladesh.
Maitri Setu (Feni Bridge) / Sabroom ICP	Bridge inaugurated Mar 2021; Largely non-operational	Non-operational ICP facilities; Political climate in Bangladesh; Security concerns.
Shillong-Silchar Highway (NH-6) Linkage	Under construction; Target 2030	Terrain challenges; Land acquisition; Timely completion.
KMMTTP Linkage (via Silchar & Mizoram)	Partially complete; Paletwa-Zorinpui-road link pending	Security situation in Myanmar; Terrain; Last-mile-road completion.

To realize Tripura's gateway vision, policies must focus on expediting the operationalization of existing infrastructure, developing internal productive capacities beyond primary commodities, mitigating trade frictions, investing in logistics, and strategically integrating with national corridors.

Synthesizing the Vision: State-Led Initiatives for a Reimagined Neighbourhood

The experiences of Tamil Nadu and Tripura underscore the need to integrate domestic economic strengths with foreign policy objectives. States can foster cross-border economic zones and corridors, leveraging local advantages and administrative machinery. Addressing connectivity deficits requires building resilient hard and soft infrastructure, learning from the operational hurdles faced by projects like KMMTTP, Maitri Setu, and the Agartala-Akhaura rail link.

Tamil Nadu's export success stems from its robust industrial ecosystem and proactive policies. For Tripura to become an economic gateway, it must develop internal productive capacities to complement new connectivity. This highlights a dual focus: leveraging external connectivity and strengthening internal economic fundamentals. A cohesive national strategy should establish high-level coordination mechanisms involving states, dedicate funding for state-led cross-border initiatives, empower states in economic diplomacy, and prioritize strategic redundancy in infrastructure.

Conclusion: Towards a Prosperous and Integrated Region

Tamil Nadu's economic trajectory, aligning with developed Southeast Asian nations, and Tripura's potential as a strategic conduit to Bangladesh and Myanmar, offer compelling pathways for India. Tamil Nadu's drive towards a $1 trillion economy and a $100 billion export hub showcases a model of federally empowered growth. Tripura's connectivity projects promise to unlock new trade opportunities for the Northeast.

However, the success of these ambitions is intrinsically linked to the geopolitical climate. Instability in Myanmar and strained relations with Bangladesh can stall progress and leave critical infrastructure underutilised. A reimagined neighbourhood policy must, therefore, be decentralized, economically pragmatic, and strategically astute. It requires investing in both physical and soft infrastructure, mitigating political risks, and developing adaptive strategies. By empowering states like Tamil Nadu and Tripura, and by judiciously navigating regional complexities, India can foster a more prosperous, stable, and interconnected South Asian and Indo-Pacific region. This approach, where states become crucial actors in realizing national geo-economic ambitions, can foster more tailored, resilient, and mutually beneficial relationships, transforming India's engagement with its neighbourhood.