Can one road change the fortunes of a state? Mizoram is hoping so. Once ready, National Highway 502A, the road it is banking on, will connect the state to a port in Myanmar from where ships will ply to Kolkata and beyond. Not only will this create an alternative to the narrow Siliguri Corridor which connects India’s mainland to the seven north-eastern states, it will also slash the 1,500 kilometre distance between Kolkata and Mizoram by half.

Announced in 2009 under the United Progressive Alliance government’s Look East policy, land acquisition for the highway began in 2011. By the end of October that year, about 227 landowners affected by the project had been identified and compensation had been awarded. However, in the following months, another 800 people turned up, claiming they too were affected, said an official of the state Public Works Department.

They furnished land titles as proof, which had been issued by the Lai Autonomous District Council. The highway lies entirely in the area managed by the council which was formed in 1972 to address the development needs of the minority tribal Lai community.

Puzzlingly, several of the land titles overlapped. Hmunhre Chinzah, the vice chairman of the Planning Board in the Lai Autonomous District Council, agreed that something had gone wrong. In the run-up to the previous council elections, he told Scroll, “Eight senior officials in the council were found making fake land settlement certificates.”

An inquiry was ordered to identify the genuine landowners. In the meantime, land acquisition could not proceed. However, work on the road has continued. The state department official said, “Once the investigation is completed, we will proceed with land acquisition for the payment of compensation.”

It’s an extraordinary admission: the highway is being built without formal land acquisition. A failure in governance in the local tribal council has created a mess which the state government has resolved by violating the rule of law.

What is the state government desperate to build NH 502A without any delay?

Lack of economic activity

In 1995, Michael Lalthanmawia, a cheerful man in his forties who also volunteers with the state industry association, set up a small steel factory outside Aizawl. The unit has struggled. Mizoram, with its one million population, is not a large market. To grow, Lalthanmawia needed to sell his steel products in larger markets. However, given the distance between Mizoram and the rest of the country, it has proved expensive to import raw steel and then ship out finished goods.

Lalthanmawia’s experience applies to most goods made in Mizoram. In categories as disparate as farm produce or handicrafts or manufacturing, this combination of distance and low population has made it hard for businesses to flourish.

As a result, the state struggles to create jobs. Take a cab in Aizawl and chances are you’ll find the driver is a college graduate. While some young people leave Mizoram, a majority, especially in rural areas, remain in subsistence agriculture. A rising number of 30-year-olds, I was told, unable to find a stable job, are still staying with their parents.

This also shows up in the structure of the local business class. With the government doubling up as the economic engine of the state, the biggest business groups in Mizoram are not manufacturers or trading houses but government contractors.

The lack of economic activity keeps Mizoram dependent on the centre for nine-tenth of its revenues. However, as the previous report showed central funding to the state is falling. And so, the hopes being pinned on NH502A. Can it kickstart economic activity?

Road, barge and ship

Early morning in April, travelling down the highway, I found the primary work – cutting the mountain to create space for the road – is almost entirely complete. On the major part of the 90 kilometre stretch, workers – mostly migrant labour from Assam and beyond – are either laying a substrate of small stones and earth over which the tarmac will be laid, or they are chipping away at the mountain slope to dislodge loose rocks which might cause rockslides in the future.

The under construction highway is better than other roads in Mizoram.

When complete, NH 502A will be 12 metres wide with large banking curves to ensure large container trucks can use the road. Even in its unfinished state, it’s better than most roads in Mizoram. The latter are mostly rutted tracks, all but impassable in the rains.

The highway starts just outside the town of Lawngtlai and runs south for 90 kilometres before crossing into Myanmar near Zochacchuiah village. In Myanmar, the highway will run for another 110 kilometres till the river town of Paletwa. Here, consignments will be shifted to barges that will sail 158 kilometres downstream to the Myanmar seaport of Sittwe. From there, Kolkata is 539 kilometres to the west.

NH 502A is a part of a larger connectivity drive in the North-East. Another upcoming highway, which the World Bank is funding, will link NH 502A with Bangladesh and Tripura. To the north, NH 502A will be connected to the NH 54 which links Silchar in Assam and Manipur. In the east, the road connecting the town of Champhai to Myanmar is being widened. Once this network is complete, said RK Patyal, a team leader with Lea Associates South Asia, which is advising the state government on this project, goods can travel through Mizoram to Manipur and beyond.

Of all these, he says, the most important road is NH 502A.

Trade trouble

A good place to understand the importance of the highway is Champhai district in eastern Mizoram. Most of the trade between Mizoram and Myanmar flows through this district. In March, Commerce Minister Nirmala Sitharaman inaugurated a new land customs office at Zokhawthar, a small village about 30 kilometres to the south-east of Champhai’s eponymous district capital, abutting the Myanmar border.

The customs complex at Zokhawthar. Across the bridge lies the Myanmarese village of Tiao.

At the border crossing, the impact of poor roads and limited local manufacturing on trading competitiveness is visible. On the Indian side lie large sacks filled with arecanuts, or the supaari used in paans. It was the largest commodity imported in Champhai, a customs official said, and it yielded Rs 73 lakh as customs revenue last year. Across the border, in Tiao village on the Myanmar side, I saw bottles of Amul Kool and tetrapacks of Frooti. “They do not want to buy Indian things while we want to buy from them,” said the official. Local traders admitted they created fake export invoices so that they can import.

Several factors are at work. One, what India has signed with Myanmar is a bilateral trade agreement. Both countries are supposed to trade what they make. However, there is little manufacturing in either Myanmar or Mizoram. There is agriculture, but Mizoram has little exportable surplus.

Further, this is a barter agreement. Importers are also expected to export. However, local businessmen cannot source products from Silchar or farther beyond and export them to Myanmar because another road through Manipur is better. Similarly, when it comes to imports, the road from Mandalay to Manipur is better than one between Champhai and the Myanmar trading town of Tahan. The road conditions, locals said, are so bad that trucks cannot ply during the rains. Importers have to rely on smaller pickups which drives up the cost.

These are lessons that David Thangluaia has learnt the hard way. After finishing his masters in science, Thangluaia came back home to Champhai and set up a school that he and his wife run. About two years ago, he tried getting into exports. The experience has not been good.

One of the products he imports is an energy drink called “Shock”. Recently, he lost a contract to supply the drink to Assam as the traders there decided to buy it via Manipur.

Between the high cost of transport and the caps on what can be imported, economics do not favour traders in Mizoram unless they cater to customers within the state – or resort to illegality.

Illegal trade

Most of what is imported into India – clothes, cosmetics, shoes, edibles like juices and wafers, even contraband like guns and drugs – is not made in Myanmar, but in China, Thailand and Malaysia, which makes it illegal according to the terms of the bilateral trade agreement.

On the export side, the illegal trade consists of fertiliser (which is subsidised for domestic use in India), wildlife and forest products like orchids and red and white sanders. For moving both sacks of fertilisers and the trees, I was told, some villages have created their own roads across the border. The sanders trade, especially, is said to be picking up. An importer who spoke on the condition of anonymity said that the quantum of illegal trade in these trees has been increasing over the last six or seven years. “This is partly due to the Chinese settling in Myanmar as the country opens up,” he said. The wood, he added, is used for making furniture or idols of the Buddha.

While Assamese businessmen from Silchar and beyond control most of the trade in Manipur, given the poor economic viability of trade in Mizoram, few of them have set up base in Champhai. Instead, most of the trade here is controlled by people from Myanmar. They have migrated here and taken voter identity cards. But they also have citizenship cards of Myanmar.

High hopes from a highway

Can a new highway solve these complex trade problems? NH 502A can provide better connectivity but given the state’s limited local manufacturing capacity, what can it realistically deliver?

It is hard to imagine Mizoram becoming a manufacturing hub. The economics of getting raw materials from outside to build products and ship them back seem unviable. As a possible exportable commodity, Patyal, who is advising the state government on these road projects, flagged agri-products.

Mizoram, he said, gets most of its grain from Andhra Pradesh in the south. It is first shipped from the Andhra coast to Haldia in West Bengal, where it is transferred to trains that pass through Assam to reach the train junction of Bairabi in Mizoram. Here, it is loaded onto trucks and sent to other parts of the state.

Once all the roads are up, Patyal said, “Mizoram can buy rice from Myanmar or Bangladesh. Or get it from Andhra through the port. The state subsidy would go down. There is also a lot that can be sold from here. The state grows a lot of cash crops like bananas, pineapples and palm oil.”

All these roads, he said, will be completed in the next two to three years. As a new gateway to the North-East opens up, it is likely that some imports to the region will start flowing along NH 502A. In that sense, Mizoram might benefit from a trading opportunity. Given the pressure on Mizoram’s finances, especially in the wake of the 14th Finance Commission, the stakes are high.

But the big unknown here is the road between Zochachhuiah, the border village, and Paletwa, the port in Myanmar. The Myanmarese want to build this stretch but the work is yet to start. While Mizoram can speed up highway construction on the Indian side, even if it means building without formally acquiring the land, it will have to rely on New Delhi’s diplomacy to make things move in Myanmar.