The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for modification of existing guidelines of the Policy on bilateral Official Development Assistance for Development Corporation with bilateral partners.

The details of the proposed modification in the guidelines are as follows:-

i. Finance Minister and External Affairs Minister, with the approval of Prime Minister, may be authorised to accept bilateral assistance from any other country, in addition to the existing bilateral partners, viz. USA, UK, Japan, Germany, France, Italy, Canada, Russian Federation as well as European Commission and European Union countries outside G-8.

ii. To accept special loan for capital intensive projects and other projects of special nature subject to the following conditions:

a) The minimum assistance from bilateral partner shall be USD 1 billion in a year, of which at least 50% shall be normal untied loans (not special loans).

b) For all contracts (including goods, services and consultancy) the anticipation may be restricted to companies of the bilateral partner country and Indian companies. While, Joint Venture 20p£rnpanies of bilateral partners and Indian companies will be eligible, Indian companies may be restricted to those where ownership by Indian nationals /companies is more than 50%.

c) There shall be a provision for removing sourcing condition and to go for International Competitive Bidding in case of lack of adequate response in the bidding process under (b) above.

d) Not more than 30% of the total value of goods and services should be insisted to be sourced from the funding country.

e) The annual rate of interest on special loans shall not exceed 0.3% (including all other applicable, charges) and the tenor shall not be less than 40 years (with 10 years of moratorium on repayment).

f) Individual projects with a minimum project cost of USD 250 million will only qualify for such special loans.

g) Any project(s) implemented by State Government (either solely or jointly) will be done with the concurrence of the concerned State Government.

Under the revised guidelines, the Finance Minister has been authorised to relax or waive any of the above conditions.

It is expected that by accepting offers of special loan for projects in Infrastructure sector and in sectors of strategic importance on mutually agreed basis, the extensive capital requirement in these sectors will be fulfilled. The decision is also expected to lead to capital augmentation for funding of projects in the Infrastructure sector and in sectors of strategic importance. Economic activity generated will boost employment and development of infrastructure. The scheme will promote "Make in India" and wherever possible, transfer of technology making further innovations possible.

Special loan conditions expanded: broader bilateral acceptance, procurement preferences, capped financing terms, and ministerial waiver authority. The revised framework authorises senior ministers, with prime ministerial approval, to accept bilateral assistance from additional countries and establishes special loans for capital intensive and special projects subject to conditions: substantial minimum annual assistance from a partner, a requirement that a significant portion remain as normal untied loans, procurement preferences for funding country and Indian suppliers with ownership and sourcing caps, a switch to international competitive bidding if responses are inadequate, capped annual interest and extended tenor with moratorium, project cost eligibility floors, and state concurrence for state implemented projects; the Finance Minister may relax conditions.