India to get $250 mn loan from ADB for tourism sector

India is set to receive a $250 million (about Rs 1,150 crore) loan from the Asian Development Bank to help develop the country’s tourism sector into a driver of sustainable and inclusive economic growth.

ADB today announced that its board of directors had approved a multitranche financing facility for the Infrastructure Development Investment Program for Tourism, which will upgrade tourist infrastructure and services, and support policy reforms in the states of Himachal Pradesh, Punjab, Tamil Nadu, and Uttarakhand. “The investment program is part of a broad tourism development plan for the four states, drawn up previously by the Government of India and ADB, which will cost almost $1.7 billion to implement,” ADB said in a press statement.

The program will fund basic infrastructure around natural and cultural heritage sites, and improvements of last-mile connectivity to make them more convenient and safe for visitors. It will also support policy reforms to make the sector more attractive to private investors.

The loans under the multitranche financing facility will come from ADB’s ordinary capital resources, and will likely be provided in five tranches. The first tranche loan of $43.4 million, for initial sub-project activities in Himachal Pradesh and Punjab, has a 25-year term, with a grace period of 5-years, and an annual interest determined in accordance with ADB’s LIBOR-based lending facility. The Government of India and the four participating state governments will make counterpart contributions of $107.1 million, for a total investment cost of $357.1 million.

The Department of Tourism in each participating state will execute the project, which is due for completion by June 2020.