US Exim Bank to set up $5-bn corpus

India to get a major financial boost from the US for development of infrastructure.

In a significant development, the US Exim Bank will set up a corpus of $5 billion to meet India’s increasing requirement of finance for infrastructural development. An announcement in this regard is expected during the ongoing visit of US President Barack Obama.

Representatives of the US administration and senior officials of Indian business chambers, who did not want to be quoted, told Business Standard: “The US Exim Bank has taken a decision to set up a special corpus of $5 billion to invest in India’s infrastructure. This will benefit both US and Indian companies to pursue their investment plans in infrastructure. The US Exim Bank’s move is crucial, especially when India will need an investment of $1,025 billion during the 12th Plan period, compared with $514 billion in the 11th Plan for infrastructural development.”

The Planning Commission had recently said fund requirement would be met with multiple instruments, including debt financing. The Federation of Indian Chambers of Commerce and Industry (Ficci) said – with India’s rapidly growing economy placing huge demands on power supply, roads, railways, ports and transportation – infrastructure bottlenecks were eroding the country’s competitiveness. An increase in power generation during the 10th Plan fell short of target, when the economy was growing at eight per cent annually.

The US Exim Bank is bullish over India’s various initiatives to boost infrastructure. The power sector is expected to add nearly 62,000 Megawatt (Mw) by the end of the 11th Plan and 100,000 Mw each in the 12th and 13th Five Year Plans.

Similarly, the National Highways Authority of India is involved in the development of roads and highways, even as the government launched development programmes for ports and related sectors with an investment of Rs 50,000 crore.

It must be mentioned here that the US Exim Bank and the National Aviation Company of India, the holding company of national carrier Air India, had signed an agreement worth $1.1 billion to support purchase of Boeing airplanes by the Indian carrier. The financing will support sale of Boeing B777-200LRs and B777-300ERs to be operated by Air India, and B737-800s to be operated by Air India Charters.