Japan to give $4.5 bn for Delhi-Mumbai Corridor

Japan Bank for International Cooperation (JBIC), a government institution, will provide an assistance of $3 billion for development of the DMIC project.

It follows talks between Prime Minister Manmohan Singh and his Japanese counterpart Yoshihiko Noda yesterday.

"JBIC, which is an official lending arm of the Japanese government, will provide $3 billion. Japan International Cooperation Agency (JICA) will given an assistance of $1.5 billion for the DMIC project," a senior official in the Department of Industrial Policy and Promotion (DIPP) said.

Japan has yesterday expressed intention to invest $4.5 billion in the Delhi-Mumbai Industrial Corridor (DMIC) project over the next five years.

India's ambitious DMIC project, which envisaged about $100 billion, is aimed at creating industrial infrastructure along the Delhi-Mumbai Rail Freight Corridor, which is under implementation. Japan is giving financial and technical aid for the project, which will cover seven states totalling 1,483 kilometres.

Japan has also evinced interest in picking up a 26% equity stake in the project.

A joint statement issued yesterday said that both the Prime Ministers welcomed Japan’s active involvement through equity participation in DMIC Development Corporation (DMICDC) as well as provision of technical expertise, board members and experts.

"In order to effectively utilise the facility and to facilitate investments by Japanese companies, India will endeavour to resolve issues within the existing regulatory framework and guidelines of capital regulations," the statement has said.

Japan has shown its interest after the government decided to replace Infrastructure Development Finance Company (IDFC) and Infrastructure Leasing and Financial Services Ltd (IL&FS) in the DMICDC, the entity implementing the project.

The two private players together hold a 51% stake in the DMICDC, while the rest lies with the government.

DMICDC is a special purpose vehicle for implementing the project. In September, Cabinet approved equity restructuring of DMICDC.

The government plans to give some equity in the SPV to state-run financial institutions like LIC and HUDCO. The Finance Ministry will take the final decision on the players to be inducted.

"The ministry will take some more time to take decision on this," the official added.

The Union Cabinet had approved an expenditure of Rs 18,500 crore on development of infrastructure for the project, which will get a boost from the new National Manufacturing Policy.