India offers another USD 1 bn soft loan to Bangladesh

India today offered Bangladesh another USD 1 billion soft loan for infrastructure development, four years after it had given a credit of the same amount to the neighbouring country.
"It is a soft credit and not a conditional one," Joint Secretary of India's Commerce department Arvind Mehta told reporters here at the end of a two-day Joint Working Group (JWG) meeting with his Bangladeshi counterpart Shahabuddin Patwary.
He said the loan with LIBOR plus (London Inter-bank Offered Rate) 2.5 per cent rates would be channelled through Exim Bank of India and India's Ministry of Commerce and Industry would be the guarantor of the USD 1 billion line of credit.

Mehta said Bangladesh could use the credit for many purposes such as infrastructure development and solar energy.
Patwary, who led the talks from Bangladesh's side, described the ninth JWG meet as "successful".
He said the meeting put weight on exploring more opportunities toward a new Dhaka-Delhi trade regime removing trade barriers and opening their markets further for reciprocal benefits.

Both the officials said many issues especially opening 22 new border haats, strengthening of road, rail, water and air connectivity, easing compliance issues and removing bottlenecks to trade were discussed during the meeting.
Coastal shipping, container train service, protocol on inland water transit and trade, waiving countervailing (CVD) duty for garment export, development of land ports in India and removal of tariff on essential commodities also came up for discussion in the meeting.

The bilateral trade between the two countries stood at USD 5.34 billion in the last 2012-2013 fiscal with USD 4.2 billion Indian exports while as part of initiatives to minimise the huge gap India in 2011 announced duty-free access to all Bangladeshi products except 25 in 2011.
The commerce ministry officials said since then, Bangladesh's exports to India rose to USD 563 million in the last fiscal from USD 498 million in the previous fiscal.
In August 2010, India signed with Dhaka a USD 1 billion credit agreement to finance Bangladesh's 14 infrastructure projects mostly in communication sector offering the amount as a soft loan.

The amount was the biggest India offered to any foreign country at 1.75 per cent interest rate with a repayment period 20 years, including a grace period 5 years.