Press Information Bureau

Government of India

Ministry of Finance

16-September-2015 14:21 IST

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi, has given its approval to a scheme to enable EXIM Bank to offer concessional finance to support Indian companies bidding for strategically important infrastructure projects abroad.

This will help Indian companies to bid for large projects abroad.

The repayment of the loan would be guaranteed by the foreign Government. The strategic importance of a project, to deserve financing under this scheme, will be decided, on a case by case basis, by a Committee chaired by Secretary (DEA) and will have members from the Department of Expenditure, Ministry of External Affairs, Department of Industrial Promotion and Policy, Department of Commerce, Department of Financial Services and Ministry of Home Affairs. The Deputy National Security Adviser will also be a member of this Committee. The Committee will have powers on conditions within reasonable limits, on a case by case basis, during the first two years of implementation of the scheme. The projects financed under these terms will be monitored by the Committee. The Committee will also consider financing strategic projects through Public Sector banks other than EXIM Bank on the same terms. The Committee may insist on sourcing of at least 75 percent of the project requirements from India, if it is found compatible with the requests for bids. The experience with this scheme will be evaluated after two years.

Background:

There are a number of Indian large project implementation companies which have developed a lot of expertise in building large infrastructure projects. However, they have not been able to win contracts abroad due to higher cost of finance in India. It is felt necessary to help such Indian Companies/entities secure contracts abroad, if it is in India’s strategic interest to have the projects implemented by Indian Companies.

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NW/AKT/SH

Concessional finance for Indian firms bidding strategic overseas infrastructure projects; foreign-government loan guarantees and committee oversight. Scheme authorises EXIM Bank to provide concessional finance for Indian companies bidding for strategically important overseas infrastructure projects, with loan repayment guaranteed by the foreign government. A Committee chaired by the Secretary (DEA) and comprising specified ministries and the Deputy National Security Adviser will determine eligibility case-by-case, set conditions during the initial two years, monitor projects, consider participation by other public sector banks on same terms, and may require at least 75 percent domestic sourcing where compatible; the scheme will be evaluated after two years.