India launches long-term credit scheme for Sri Lanka, other developing countries

New Delhi (IANS): India this week launched a long-term concessional credit scheme to help build export infrastructure in developing nations, especially in Africa, the Gulf and neighbouring countries like Bangladesh, Nepal and Sri Lanka.

“For big projects like rail, power and road infrastructure, developing countries can get long-term finance under this scheme.

It will help build capacities in the developing countries,” Commerce and Industry Minister Anand Sharma told reporters after launching the scheme here.

The new ‘Buyer’s Credit’ programme will enable Indian companies to be in a competitive position vis-a-vis peers from other nations in project bids.

The scheme has been developed by the state-run Export-Import (Exim) Bank of India in conjunction with the Export Credit Guarantee Corporation (ECGC).

“Developing countries are the major markets for India’s project exports, and these countries demand medium to long-term credits. With the introduction of this new product, I am sure, many project exporters would be in a position to venture into new markets, and help diversify India’s exports,” the Minister said.

Under the new scheme, developers can get loans up to 85 per cent of the contract value. The line of credit would be normally in the range of five to eight years, officials said.

Governments and government-owned entities overseas can use the Buyer’s Credit facility for financing import of projects from India on deferred payment terms.

“The product with its attractive feature of extending credit directly to overseas buyers of projects from India without recourse to Indian exports, will lead to a substantial rise in exports from India,” said Chairman and Managing Director of Exim Bank T.C.A. Ranganathan.

“Credit period would normally be five to eight years, however, longer credit period could be considered in deserving cases,” he said.

Ranganathan said Exim Bank had prepared a “positive list of countries” which includes 30 countries mostly from Africa, the Middle East and Asia.

Neighbouring countries like Sri Lanka, Nepal, the Maldives, Bhutan, Bangladesh and Afghanistan are also in the list.

On insurance cover the new facilities, Export Credit Guarantee Corporation of India Chairman and Managing Director Arvind Mehta said: “While Exim Bank will extend the credit facility, it will obtain credit insurance cover under National Export Insurance Account through ECGC.”

Mehta said the insurance premium would be borne by the project developers.