New Delhi, Oct. 14: The Union cabinet today gave its nod for fast-tracking the Kaladan Multi-Modal Transit Transport Project that connects Myanmar to the Northeast, giving a fillip to Prime Minister Narendra Modi's Act East policy.

The cabinet revised the cost of the project from Rs 535 crore in March 2008 to Rs 2,904 crore. The funds will be given as grant to Myanmar.

The project will provide an alternative access route to the Northeast and is expected to contribute towards the region's economic development.

The idea is to have a 225km waterway from Sittwe Port to Paletwa, both in Myanmar, along the Kaladan river. A 62km road will connect Paletwa to the Indian border village of Zochawchhuah (in Mizoram). The road stretch was cited to be 109km till December last year but details made available today said it would be 62km. Three surveys were conducted by a Mumbai-based company for the road. Sittwe is nearly 550km by sea from Calcutta.

The interlocking Indian road component in Mizoram includes a 99.83km road from Zochawchhuah to Lawngtlai town, the headquarters of Lawngtlai district. A road of over 250km already connects Lawngtlai to the state capital, Aizawl.

"A very good road is being constructed on the Indian side which should be finished in three years. But construction is yet to begin on the Myanmar side," a senior council member of Lai Autonomous Council said over phone from Lawngtlai.

A study by a think tank last year had nudged the government on pending infrastructure projects that connect Myanmar and the Northeast.

Sources said the Modi government is also looking at fast-tracking the connectivity between the Northeast and its Southeast Asian neighbours. A commercial road link and rail link are also on the cards through Manipur into Myanmar.

The Modi government has claimed to have transited from Look East Policy to Act East policy. However, the northeastern states have often asked how the region would be made a stakeholder.

The Kaladan project has been in a state of stagnation for some time, apparently because of land acquisition problems in Myanmar. The idea was conceived over a decade ago when in April 2003 a detailed project report was made on the waterways component, followed by a road component project designed by the public sector company, RITES.

The project was jointly identified by India and Myanmar to create multi-modal transport for shipment of cargo from the eastern ports of India to Myanmar as well as to the Northeast through Myanmar. This project, which will connect Sittwe Port to the India-Myanmar border, is expected to contribute to the economic development of the northeastern states, particularly Mizoram, by opening up the sea route to the land-locked territory.

It also provides a strategic link to the Northeast by reducing pressure on the Siliguri corridor.

A direct access between West Bengal and Tripura through Bangladesh will be established when the Calcutta-Dhaka-Agartala bus service, scheduled for Friday, starts. Dhaka had recently helped transport foodgrains to Tripura in the wake of a mega block because of gauge conversion on the Lumding-Silchar-Badarpur rail link that carried supplies to Tripura and Mizoram.

The Kaladan project serves India's economic and strategic interests but also "contributes to the development of Myanmar and its economic integration with India," a government release said today.

In March this year, commerce minister Nirmala Sitharaman inaugurated the Zorkhawthar land custom station in Mizoram and promised that projects connecting India and Myanmar would be expedited. The Zorkhawthar-Aizawl road is called the old India-Myanmar border road.