NEW DELHI: What is good for Bangladesh is good for India. The government is extending a $2 billion line of credit to its neighbour which is expected to create 50,000 jobs in India and provide a big boost to the government’s Make in India drive.
A line of credit is a promise to provide loans at subsidized rates from agencies such as Exim Bank. These are normally conditional on the recipient using the loan amount to buy equipment and services from Indian entities such as BHEL, RITES, small and medium enterprises.
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“We have already provided $862 million line of credit to Bangladesh and this $2 billion is going to provide a big boost to project exports from India and help Indian companies,” Yaduvendra Mathur, chairman and managing director of Export Import Bank of India, told TOI.
He said the line of credit will also provide a huge boost to several sectors such as steel and cement as they will be exported to Bangladesh for the projects which will be undertaken there. “It is a big boost to manufacturing and projects but also create jobs,” Mathur said. Since taking over Prime Minister Narendra Modi has extended nearly $6 billion line of credit under his Look East policy to Nepal, Bangladesh, Sri Lanka and Maldives.
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The Exim Bank has set up a special infrastructure facility in its Delhi office to route the projects from India and is working closely with the ministry of external affairs on boosting project exports from the country.
Under the line of credit (LOC) a minimum of 75% of goods and services needs to be of Indian origin and must be procured from India. According to Mathur, Exim Bank of India’s LOCs are boosting the country’s international trade and project exports. Exim Bank plays an active role in supporting Indian project exporters to execute developmental projects in over 60 countries which in turn provide immense opportunities to Indian firms to demonstrate their project execution capabilities, according to Mathur.
“Associated supplies through sub-contractors contribute to increase in India’s global trade. At the same time furthering the Make in India concept while generating additional employment in India,” he said.
So far, the government has provided 225 LOCs to 61 countries under the Development and Economic Assistance Scheme. These LOCs have been extended to countries in Africa, Asia, Latin America, Oceania and the CIS, totalling $14.87 billion. Over 170 Indian companies have executed or are executing projects worth $7 billion under this initiative.
Export-Import Bank of India is the premier export finance institution of the country. It commenced operations in 1982 under the Export-Import Bank of India Act, 1981.
The government launched the institution with a mandate to not just enhance exports from India, but also to integrate the country’s foreign trade and investment with the overall economic growth.
Source: Times of India