- The NSCN(IM) funds its armed activities through extortion and narcotics trade in Manipur hills
- The NSCN(IM) supports other armed groups, creating a widespread insurgent economy
- Other insurgent groups misuse ceasefire agreements to operate camps and collect illegal taxes
Everyone talks about Manipur as a story of the valley-dominant Meitei community versus the Kuki tribes who are settled in southern Manipur's Churachandpur and a few other hill districts to the east. That is true in the context of the ethnic conflict that began in May 2023.
But a different story starts to surface in tracing from where the money in these hills actually comes from. It's a story that has been running quietly in the background long before the May 2023 violence made global headlines.
It starts with the National Socialist Council of Nagalim (Isak-Muivah) or NSCN(IM), an armed group that came out of a 1988 fracture within the original NSCN, itself a product of leaders who walked away from the 1975 Shillong Accord rather than give up on the dream of a sovereign "Greater Nagalim", which reaches well beyond Nagaland's borders into Manipur's Naga-dominant hill districts such as Ukhrul, Senapati, Tamenglong and Chandel.
A dream like this needs funding on a scale that rarely comes from people simply opening their wallets. So, the NSCN(IM) built a system of coercion dressed up in the language of statehood. It calls itself the 'Government of the People's Republic of Nagalim' (GPRN) and calls its collections "taxes."
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Investigators including the Enforcement Directorate and independent researchers who have studied the armed group for years all call it what it is: extortion.
If the political language is kept aside, the results are quite mundane: a house tax on ordinary families, a cut skimmed from government salaries in areas the armed group controls, "ration money" squeezed out of businesses, contractors, truckers and anyone moving goods or making a living in the hills.
The two big earners that researchers keep coming back to are extortion itself and the narcotics trade.
By December 2022, this had changed from being an open secret to becoming a legal fact. The Enforcement Directorate charged the NSCN(IM) treasurer with illegal tax collection in a formal acknowledgment of the system that had operated in plain sight in the hills for years.
The August 1997 ceasefire between New Delhi and the NSCN(IM) was supposed to be a bridge to something permanent, but 30 years later and more than a decade past the 2015 Framework Agreement, that bridge still hasn't reached the other side. In the meantime, the outfit has built something close to a parallel government across the hills.
On paper, the insurgents who are part of the ceasefire are meant to stay confined to designated camps. In practice, the Indian Army finds itself raiding hideouts that were never supposed to exist in places like Kekru Naga village or along the India-Myanmar border, based on intelligence about extortion happening well outside the designated camps.
The trouble is most clearly visible on National Highway 2, the Imphal-Dimapur road that keeps Manipur's economy alive. For years, trucks making that run have paid a toll in everything but name. They bought prepaid "slips" in Nagaland's Dimapur and stopped at checkpoints on the highway to pay up. Drivers who don't pay the insurgents suffer beatings or their vehicles are set on fire. Even government officials haven't been spared. The Ukhrul deputy commissioner had to flee to the state capital Imphal after suggesting the extortion network be dealt with.
Every rupee taken off that highway shows up somewhere else later, in higher prices in Imphal valley, in development money that never reaches the hills and in a slow and steady lesson that the gun decides things, not the law.
The NSCN(IM) built the market that the rest of Manipur's insurgent economy now runs on. Most of what it collects stays within its own territory but a share has long been passed on to other armed ethnic groups in its orbit, effectively seeding an entire ecosystem of insurgency rather than just one organisation.
Valley-based armed groups and splinter factions took the same blueprint and ran with it: their own "taxes" on traders, kidnappings when people didn't pay and markets shut down as punishment. Long before May 2023 ethnic violence broke out, the normalisation of extortion as a stand-in for governance had already been quietly hollowing out the state's authority.
Some of the insurgent groups also coordinate and support each other. A National Investigation Agency (NIA) chargesheet from March 2025 alleged that a China-Myanmar-based NSCN(IM) module helped smuggle insurgents from the PLA and KYKL into Manipur in a move meant to exploit the ethnic conflict and further destabilise the state. The PLA and KYKL are insurgent groups from the Meitei community.
Even the nearly two dozen Kuki insurgent groups that are under the suspension of operations (SoO) agreement routinely face allegations of extortion and threatening the public in blatant misuse of the agreement. The over two dozen Kuki insurgent groups come under two umbrella groups - the Kuki National Organisation (KNO), and the United People's Front (UPF). These two representing the others have signed the SoO agreement.
The highway also passes through many villages which are not far from the designated camps of the Kuki armed groups. They are the ones who collect "taxes" from transporters. Even police personnel get extortion demands in Kangpokpi, a fact that indicates just how insidiously the insurgents have penetrated into the system by misusing ceasefire.
The same cross-border pipelines the NSCN(IM) spent decades building for extortion money, weapons and narcotics are the ones feeding Manipur's conflict economy such as arms, Golden Triangle drug profits and safe houses across the border in Myanmar's Sagaing region.
The standard read on Manipur about Meiteis versus Kukis is not wrong, but it's incomplete. Underneath it sits a 40-year-old extortion economy that has slowly eaten away at the state's economic lifelines, bankrolled rival insurgents and built a shadow government across the hills, all while public faith in the actual government wore thinner and thinner.
Even inside Naga civil society, more people are now willing to say out loud what many have long thought privately, that extortion dressed up as nationalism needs to end.
There won't be lasting peace in Manipur until that economy is dismantled. All undesignated camps of armed groups should be dismantled. Other actions should include financial investigations that actually trace and choke off the armed group's revenue, protection for highway trade and a ceasefire renegotiated on terms that no longer treat extortion as an unspoken entitlement.
The gun collecting 'tax' today is the same gun that fires tomorrow. Manipur has to be fixed on the highways, in the hills and in the ledgers of the GPRN.
