Speaking at the Netaji stadium here, the President said the Islands lie at the important junction of South Asia and South East Asia.
The islands are not only the maritime gateway to the Bay of Bengal but also overlook major international sea routes, he said.
"These islands have the potential to be a springboard for India's engagement with South East Asia and the Indo Pacific region. They can be developed as a significant trading, shipping and tourist hub", he said.
Mukherjee said the islands "are the home to some of our most precious tribal communities who are equal partners in the nation's progress through modernization."
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"Progress must come to the Andaman and Nicobar islands but it must come with deference to the people, their traditions and the ecology," he said.
He further said "the beautiful territory may be 1200 km from mainland India but it truly represents a 'mini India' - with settlers from various parts of the country as also our indigenous tribes".