THE ECONOMIC SIGNIFICANCE OF ASSAM

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• Document Creation Date: November 16, 2016
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• Sequence Number: 1
• Publication Date: December 17, 1962
• Content Type: BRIEF

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Current Support Brief
CIA/RR CB 62-86
No. Pages 10
17 December 1962
THE ECONOMIC SIGNIFICANCE OF ASSAM
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
SECRET
GROUP 1
Excluded from automatic
downgrading and
declassification
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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THE ECONOMIC SIGNIFICANCE OF ASSAM
The continuing possibility that Communist China might invade and
occupy Assam raises the question of the economic value of that area
both to China and to India. The following description of economic assets
in Assam focuses on the principal resources of petroleum and agriculture
and assesses their significance to the economies of China and India.
Petroleum Resources in Assam
Assam State in northeastern India represented India's sole commer-
cial production of indigenous petroleum until 1961, when production began
in the Ankleshwar oilfield, about 90 miles north of Bombay. In the third
quarter of this year the oilfields in Assam were producing at the rate of
about 550,000 metric tons (mt) per year of petroleum, almost 60 percent
of India's total domestic production of about 950,000 mt per year at that
time and about 5 percent of India's total supply.
Production in Assam is derived from the Digboi-Nahorkatiya area (see
the map), where reserves are tentatively estimated to be about 400 million
barrels of oil and almost 750 million cubic feet of gas. Exploration and
drilling are continuing in Assam, and there is considerable optimism that
current reserves will be increased substantially. Estimated reserves at
present are comparable to those in British Borneo or in Brazil but are in-
significant in comparison to reserves in the US or the Middle East and
probably are less than the undetermined reserves of mainland China.
Two oil refineries with a combined capacity of about 1,250,000 mt
per year are located in Assam, one at Digboi and one near Gauhati.
The remodeled Digboi refinery, located at the oilfield, has a capacity
of about 500,000 mt per year and operates on crude oil from the Digboi
and Nahorkatiya oilfields. This refinery is owned by the Assam Oil Co.
The Rumanian-built refinery at Nunmati, near Gauhati, is owned by the
Government of India and has a capacity of 750,000 mt per year. Crude
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oil from the Nahorkatiya field will be shipped to this refinery through a
newly completed 16-inch, 270-mile pipeline. The refinery at Gauhati
was recently completed and is still in the shakedown stage of operation.
Reports on this refinery continue to cite operational problems and
failures. Although the full refinery capacity cannot now be employed,
it is expected that full operation will soon be achieved.
Neither refinery in Assam can produce aviation gasoline. Except
for this limitation the refineries have process facilities to produce a
full line of refined products. These refineries, however, were designed
to restrict output of motor gasoline in favor of that of kerosine and other
middle distillates which are in greater demand than gasoline in northeastern
India. Although these refineries do not now produce jet fuel, they probably
could be operated to produce a fuel suitable for use in jet aircraft.
The oil facilities in Assam are an integral element of India's eco-
nomic plans and growth, but the loss of Assam would not affect seriously
India's total supply of petroleum, except as the loss of these facilities
would impose heavy burdens on India's supply of POL to areas contiguous
to Assam. About 95 percent of India's total supply of oil is derived
through imports. About two-thirds of India's supply of products is de-
rived from imported crude oil processed in two refineries in the Bombay
area and one at Vishakhapatnam on the east coast of India. These three
refineries represent almost 80 percent of India's refining capacity. The
other one-third of India's supply of products is imported.
The oil facilities in Assam, in their present condition, would be an
important addition to Chinese Communist supply capabilities. These
facilities could provide China immediately with 100,000 rnt per year of
gasoline from the Digboi Refinery alone, or more than enough gasoline
to supply the present estimated combat troops in the North East Frontier
Agency area and more than half of the total requirements for all troops
(combat and support) estimated to be in the area. Moreover, production
of oil probably could be increased in the near future to the limit of re-
fining capacity to provide 1,250, 000 mt per year of all petroleum prod-
ucts, which amount corresponds to about 20 percent of China's total
supply of POL in 1962. The acquisition of the oil reserves in Assam
also would add significantly to China's oil resources.
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Significance of Agriculture in Assam
Agriculture in Assam is of particular importance to India because of
its power to earn foreign exchange. Assam produces about half of India's
tea and 20 to 25 percent of Indian production of raw jute, and, for the past
5 years, jute products and tea have accounted for approximately 40 per-
cent of the total value of India's exports. Assam also produces about 5
percent of India's rice but is a net importer of rice and wheat. In the
long run, Assam has a potential for increasing production of rice signifi-
cantly by more intensive methods and by possible shifts in the cropping
pattern, but these increases are not likely to take place easily or quickly.
Yields of tea in Assam are the highest in India, but the quality of the
tea is not the best. Tea is a perennial that takes 4 to 8 years to mature,
depending on location, soil, and climatic conditions, and the tea plant
will bear for several decades. The hilly tracts of Assam are particu-
larly well suited to tea, for the soil is deep and has a high humus content,
the rainfall averages about 100 inches annually and is distributed well
over the year, and temperatures are high throughout the year.
In each of the 3 years from 1959 to 1961, Assam produced an aver-
age of 150,000 mt of tea, or nearly half of the crop in India (see Table 1).
Exports of tea earned India in excess of $250 million in each of those
years. Exports of tea account for about half of India's total agricultural
exports and about 20 to 25 percent of India's total export trade (see
Table 3).
Production of jute in India for the past decade has averaged about 4.3
million bales (400 pounds/bale) annually (see Table 2) and reached an all-
time high in 1961-62 at 6.3 million bales, an increase of about 55 percent
in comparison with the previous year. Production of jute in Assam dur-
ing the 1950's amounted to about 25 percent of the Indian total, but in
recent years its relative importance has been declining.
From 1956-57 to 1960-61, Indian jute acreage averaged 700,000 hec-
tares. In 1961-62, however, this acreage was increased to 914,000
hectares, prbmpted by a rise in the price of jute manufactures. In
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Assam in 1960-61 and 1961-62, jute was grown on 121,000 hectares and
147,000 hectares, respectively.
Jute yields in Assam are lower than the average for India as a whole.
Because it rapidly depletes the fertility of the soil, jute usually is grown
in rotation with paddy rice.
Until May 1962, when a ban on shipping raw jute out of India was
lifted, jute was exported only in the form of jute manufactures, such as
cordage, sacks, bagging, and burlap. The value of jute products has
been significant in the export trade of India in the last 5 years, averag-
ing about 20 percent of the total (see Table 3). In 1961, exports of jute
products exceeded $300 million.
Production, acreage, and yields of rice in Assam have remained
relatively constant in recent years. An average of 1.7 million hectares
has produced about 2.5 million mt of paddy rice (see Table 4). Assam
accounts for approximately 5 percent of both Indian acreage and produc-
tion of rice.
Assam is a net importer of rice, although the per capita production
of paddy rice in Assam is higher than in India as a whole. In most re-
cent years, Assam imported in excess of 20,000 mt of rice annually
(see Table 5). Because of the importance of the cash crops -- tea and
jute -- Assam is a relatively high income area.
There are possibilities for increasing output of rice in Assam. Jute
and paddy rice have similar soil and climatic requirements. If the jute
acreage were all sown to rice, it would be possible to enlarge the rice
acreage by about 150,000 hectares, or about 9 percent.
There also are possibilities for increasing rice yields in Assam by
employing more intensive techniques similar to those used in mainland
China. In interior Kwangtung Province, where climatic conditions are
roughly similar to those in Assam, paddy rice yields are 2,750 to 3,000
kilograms per hectare (kg/ha) compared with about 1,400 kg/ha in Assam.
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It is unlikely, however, that yields could be quickly raised to this level.
In summary, the Chinese Communists would not find surpluses of food
in Assam, although the tea and jute crops could provide foreign exchange.
Table 1
Production of Tea in India and Assam
1959-61
Thousand Metric Tons
Year
India'21
Assam
Assam as a Percent
of India
1959
323.9
150.9 la/
47
1960
316.3
155.0 c/
49
1961
348.6
182.4 c/
52
a.
b.
C.
1/
2/
3/
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Table 2
Production of Raw Jute in India and Assam
1952/53 - 1961/62
Year
Thousand 400-Pound Bales
Assam as a Percent
of India
India
Assam
1952/53 a/
1953/54 a/
1954/55 a/
4,6o5
3,129
2,928
925
807
750
20
26
26
1955/56
4,198
1,212 21
29
1956/57
4,289 b/
1,049 a/
24
1957/58
3,98312/
1,094 c/
27
1958/59
5,158 b/
N.A.
N.A.
1959/60
4,605 b/
N.A.
N.A.
1960/61
3,982 b/
813 a/
20
1961/62
6,269 b/
1,131 d/
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Table 3
India: Exports and Value of Tea and Production of Jute Manufactures
1957-61
Year
Million US
Commodity Exports
as a Percent of Total Exports
Tea
Jute Manu-
factures
Total
Exports 2.4
Tea
Jute Manu-
factures
Tea and. Jute
Manufactures
1957
259 a/
232 b/
1,339 a/
19
17
37
1958
287 a/
209 b/
1,198 2.1
24
17
41
1959
265 a/
222 lo/
1,298 a/
20
17
38
1960
252 a/
267 b/
1,308 a/
19
20
10
1961
262 c/
307 a/
1,403 ?a/
19
22
41
a.
8/
b.
9/
d.
11/
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Table 4
Acreage, Yield, and Production of Rice in India and Assam a/
1955/56 - 1961/62
Year
India
Acreage b/
(Thousand
Hectares)
Yield ,
(Kg/Ha
Production 12/
(Thousand
Metric Tons)
Assam
Acreage I/
(Thousand
Hectares)
Yield
(KgZHa
Production a/
(Thousand
Metric Tons)
Production in Assam
as a Percent
of Production
in India
1955/56
31,522
1,311
41,334
1,743
1,457
2,540
6
1956/57
32,278
1,349
43,552
1,745
1,491
2,601
6
1957/58
32,289
1,185
38,268
1,703
1,419
2,418
6
1958/59
32,957
1,404
46,26o
1,703 e/
1,450 2./
2,469
5
1959/60
33,521
1,408
47,187
N.A.
N.A.
2,466
5
1960/61
33,567
1,528
51,297
1,748
1,428
2,496
5
1961/62
33,859 f/
1,513 1./
51,224 f/
1,771 1.1
1,419 f/
2,513 f/
5
a. In terms of paddy rice, which can be converted into terms of milled
0.667 to the figure for paddy rice.
b. 12./ unless otherwise indicated.
c. Kilograms per hectare. Calculated from production and acreage data.
d. 21/ unless otherwise indicated.
e. Estimated.
17 December 1962
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rice by applying a
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factor of
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Table 5
Rice Trade of Assam a/
1956/57 - 1960
Metric Tons
Year12/
Imports
Exports
Net Imports
1956/57
30,181
8,694
21,487
1957/58
27,488
1,984
25,504
1958/59
16,081
770
15,311
1959/60
31,231
184
31,047
1960 c/
8,760
41
8,719
a. 1.2/
b. 1 April - 31 March.
c. 1 April - 30 September.
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Analysts:
Sources:
S-E-C-R-E-T
25X1A
1. India, Central Statistical Organization. Monthly Statistics of
the Production of Selected Industries of India, Feb 62, p. 25.
U.
2, State, New Delhi. Dsp FAS-AGR-81, 23 Mar 62. U.
3. India, Central Statistical Organization, op. cit. (1, above),
p. 86. U.
4. India, Central Jute Committee. The Indian Jute Atlas,
Calcutta, 1959. U.
5. India, Central Statistical Organization. Monthly Abstract
of Statistics, Oct 62, pp. 71-73. U.
6. India, Ministry of Food and Agriculture. Area, Production,
and Average Yield per Acre of Principal Crops in India,
1949/50 to 1957/58, 1960. U.
7. State, Calcutta. Dsp 328, 24 Apr 62. LT.
8. Agriculture, ERS. Memorandum dated 28 November 1962. U.
9. UN. UN Yearbook of International Trade Statistics, 1960,
New York, p. 281. U.
10. State, New Delhi. Dsp FAS-AGR-81, 23 Mar 62. U.
11. Ibid., Dsp FAS-AGR-32, 17 Sep 62. U.
12. India, Central Statistical Organization, op. cit. (5, above). U.
13. India, Ministry of Food and Agriculture, op. cit. (6, above).
U.
India, Ministry of Food and Agriculture. Bulletin on Food
Statistics, Jun 62. U.
14. State, New Delhi. Dsp FAS-AGR-97, 24 Apr 62. U.
15. India, Ministry of Food and Agriculture, op. cit. (13, above).
U.
17 December 1962
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UNCLASSIFIED
Petroleum Resources in Assam
la ngtrilt
(twang
NAHORKATIYA
(OH India Ltd.)
Dihrugarh
MORAN
(Oil India Ltd.) fr
Tezpur
latta .
lorhat
.Sadep
.Saikho Ghat
Ledo
NUNMATI REFINERY
whah
16" Pipeline
(Oil India Ltd.)
Bay of Bengal
rack or trait
111-0Pd,
narrow guqi
orih -Ecte-,Frttritiei-- A
and conies
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RED
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SEC
SECRET
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1
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Analyst: &
RAG
-WFICIt: OF RESEARCH AND REPORTS
Control Staff
Control Sheet
Series Number CB 62-86
Date of Document 1.1 Tre7-67-
25X1A
Le.s.2.2.Lepl
Copy No.
102, - 143 Received in St/P/C
_102
- 103
104
105
106
107
10825X1
109
110
111
---- 112
?-
---- 113,__114
Cla s sification Secret
Number of Copies 250
Date
18 Dec 62
RAG 9 Dec
25X1A
Returned
01151,W011?0110.01C
See attached memorandum
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