Govt approves initial pact with South Korea for $9 billion export credit1 min read . Updated: 07 Jun 2017, 10:23 PM IST
The cabinet approves signing of an initial pact with South Korea for export credit facility of $9 billion for infrastructural development in India
New Delhi: The cabinet on Wednesday approved signing of an initial pact with South Korea for export credit facility of $9 billion for infrastructural development in India.
The memorandum of understanding (MoU) is proposed to be signed between the Export-Import Bank of India (EXIM Bank) and Export-Import Bank of Korea (KEXIM) during the forthcoming visit of finance minister Arun Jaitley to Korea during 14-15 June 2017 for the annual financial bilateral dialogue, an official statement said.
The decision is expected to promote the country’s international exports, and deepen political and financial ties between India and Korea, it added.
According to the statement, the export credit will be utilised through lending by EXIM Bank for promoting projects for priority sectors, including smart cities, railways, power generation and transmission etc in India, and for the supply of goods and services from India and Korea as part of projects in third countries.
Under the implementation strategy, the parties to the MoU will hold mutual consultations to structure the financial assistance, review the existing arrangements and related procedures. EXIM Bank will identify viable projects in India, the statement said, adding “for projects in third countries, both parties will jointly identify viable projects".
The statement said it is understood from EXIM Bank that the $9 billion would be extended by KEXIM by way of investment credit (typically export credit facility to finance projects with a certain level of Korean import content and interest rates as per OECD export credit guidelines).
Noting that the supply of goods and services from India and South Korea as part of projects in third countries will be an additional avenue which this MoU will enable, the statement said it will help in exchanging mutual experience, sharing information on financing export and import operations, project assessment and knowledge generated in respective fields of activities.