Wooing the 7 Sisters - Part 1 : Arunachal Pradesh

By Avishek Rakshit - 21 November, 2012

Arunachal Pradesh witnesses the most frustrating scenario of the north-east, registering a stagnant market over the last 2 years. With only seven channel partners operational in the state, mainly in the capital Itanagar, India's eastern-most state fails to boast of a robust channel hierarchy or an impressive record of performance in IT.

Arunachal Pradesh borders the states of Assam and Nagaland to the south, and shares international borders with Bhutan in the west, Myanmar in the east and the People's Republic of China (PRC) in the north.

"Market in Arunachal Pradesh is not at all organized. There is hardly any growth in the market and the partners find it hard to progress in the channels. Twenty three percent of the total business is generated out of Itanagar and the market is evenly spread. But the channel partners are mostly centered around the state capital," said Saroj Jain of Swastik Systems.

Like the rest of the north-east, except Assam and Tripura, Arunachal Pradesh too suffers from a lack of distributors and service partners, with logistics being the biggest problem. Among all the Seven Sisters, Arunachal Pradesh has the toughest and most eeriest road conditions (connecting Guwahati) and the weather conditions, too, are not always favorable for good logistical movement.


That apart, channel partners lack the exclusivity of IT in the state; most of them have parallel lines of business or have conglomerated products like light engineering products, automation, IT, consumer electronics and related products as a single identity making IT business in the state a sub-stratum in their business lines.

"One can imagine the market condition when the total population in the state capital is a meager 1.5 lakh people! There is hardly any demand in the market and on top of that there has been some salary or bonus problem with the government officials, on account of which this year the market has shrunk to its worst phase," Jain added.

Like most of its counterparts, retail comprises of the largest consumer vertical; rather nearly 100% of the business in Arunachal Pradesh is driven by retail.
"The only segment we have here is retail. The state government tenders are bagged by companies in Guwahati and other big players. Regional partners like us are not able to focus on this segment at all," he added.

Frustrated with the stagnation in the market for the past 2 years and a ‘no respite scenario' in the near future, channel partners in Arunachal Pradesh are solely considering the profitability in trading and not their topline growth.

Even as Arunachal Pradesh is the prized possession of India in its north-east boundary, the state has clearly failed to emerge as a preferred channel choice, with an absolutely unorganized channel market in the state.

However, with the new state Industrial Policy 2001 in place, the state is now encouraging investors from outside to have a 100% equity ownership of an industrial unit for a maximum period of 30 years. By the end of it, such equity holding will be reduced to 49%, the remaining 51% will be held by a local Arunachal Tribal entrepreneur or a group of local tribal entrepreneurs or the state government, if it considers it necessary to do so.

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