Exim Bank of India’s LOCs are boosting India’s international trade and project exports. LOCs provide a risk-free, non-recourse export financing option to the Indian exporting community, which helps Indian companies to penetrate new markets and enhance their export volumes in overseas markets. Through the LOC Programme, Exim Bank plays an active role in supporting Indian project exporters to execute developmental projects in over 60 countries, which in turn provide immense opportunities to Indian companies to demonstrate their project execution capabilities. Associated supplies through sub-contractors contribute to increase in India’s global trade, at the same time furthering the “Make in India” concept while generating additional employment in India.
Under the GOI’s India Development and Economic Assistance Scheme, through the Development Partnership Administration Division, Government of India has been supporting development of partner countries through LOCs. As on date, total of 225 LOCs have been extended to 61 countries in Africa, Asia, Latin America, Oceania and the CIS, aggregating USD 14.87 billion. Over 170Indian companies have executed/are executing projects valued around USD 7 billion under the GOI-LOCs. Under the LOCs, on completion of specified milestones, payments are made to the Indian companies, by Exim Bank, based on the authorization of the borrower countries, thus guaranteeing payments to the Indian companies. Under the LOCs a minimum of 75% of goods and services needs to be of Indian origin and must be procured from India.
Some of the projects under GOI LOCs, which can be highlighted, are:
LOC OF USD 27 MILLION TO MALI
In April 2010, the first tractor assembly unit in Mali, valued USD 12 million, commenced operation with construction assistance under the LOC. The fuel-efficient tractors and machines supplied from India, transformed the way African farmers used to do farming. Now with a single machine they could cultivate, plough, harrow, haul and do many other things at a low running cost. The Government of Mali has now converted the facility to a regular factory.Agricultural production and productivity has gone up by 30%. Mechanization has led to increase in areas under cultivation and output. Timesaving efficient practices in terms of tilling schedules have been adopted especially for cultivation of cotton, rice and sorghum. This has provided the farmers with increased revenues and relative food security to Mali. Some farmers are also earning additional income by renting out the tractors to other smaller farmers.
The rural electrification project of USD 15 million under the LOC, has provided employment to many. People are hired for running, maintenance and servicing purposes. The project was timely as it provided electricity during acute deficit. The project has led to increased social and economic development by way of positive externalities such as increase in industrial production in areas around Bamako due to stable electricity supply, growth of new industries, employment creation, income generation, improvements in living conditions, reduction in poverty, improvement in health facilities due to stable power supply and increase in school enrollment rates.
LOC OF USD 40 MILLION TO ANGOLA
The project envisaged modernization and upgradation of workshop, supply of railway rolling stock in Angola where coaches are operating between Namibe and Matala (434 km) carrying, both passenger and freight traffic. This provided cheaper and faster mode of transportation as compared to road. It has facilitated exploration of Kassinga Mines deposit bed (iron ore) in the municipality of Jamba Huila Province. Farmers are using railways to transport their agricultural products to interior regions of Angola, at a reasonable price.
USD 30 MILLION LOC TO MALAWI
Various types of agricultural plants and equipments have been supplied by Indian SMEs to Malawi under One Village One Product Programme (OVOP) and Small Holder’s Irrigation Programme. The supply of equipment for agro processing, such as flour mills, sugarcane crushers, fruit pulp and bottling equipment, along with associated training, have empowered farmers and especially women entrepreneurs in rural areas of Malawi to increase their income and generate sustainable livelihood.
LOCs OF USD 80 MILLION TO RWANDA
Two LOCs aggregating USD 80 million were extended to the Government of Rwanda for financing the 28 MW Nyaborongo Hydro-power project in Rwanda. The project is Rwanda’s biggest hydroelectric power plant and would be a boost to Rwanda’s national power grid. The project is catering to 25% of total electricity demand of Rwanda.
LOC OF USD 27 MILLION TO SENEGAL
Under the LOC, 2394 diesel engine pumpsets were supplied from India and installed in rice producing zones of Senegal.Coverage area under irrigation has increased more than two fold. Rice production in the region has also gone up by 180%. Now, around 40% of the rice demand of Northern Senegal is being met by local production, as compared to the earlier 19% of local demand. The project has contributed to reduction in the import bill of food products as also generated employment for field workers (particularly women farmers) and servicing staff of equipment.
LOC OF USD 25 MILLION TO COTE D’IVOIRE
One of the most important projects which Exim Bank is proud of being associated with, is the Mahatma Gandhi Biotechnology Park under implementation in the Grand-Bassam special economic zone. The activities of the park would include:
- Hosting companies in the sector of ICT and Biotechnology
- Developing the production of products and services related to ICT and Biotechnology
- Developing applied research in ICT and Biotechnology
- Promoting ICT training and Biotechnology.
Specific objectives of the Mahatma Gandhi Biotechnology Parkare :
- Improvement of the economic environment
- Job creation
- Easy access to the products of information technology, communications and biotechnology
- Upgrading training and research
- Production and export of new technologies
- Strengthening of the competitiveness of local businesses.
LOCs OF USD 798 MILLION TO SRI LANKA
Re-construction of Railway Lines by IRCON International Ltd. in Northern Province of Sri Lanka has been achieved through the LOCs, which has enhanced the accessibility, safety and speed of train travel in Sri Lanka.
The Omanthai to Pallai Railway line project was completed during September 2013 and the Madhu Road to TalaiMannar Railway line project was inaugurated by our Hon’ble Prime Minister Mr. NarendraModi in March 2015.
USD 800 MILLION LOC TO BANGLADESH
Under the LOC, 290 double decker buses, 50 articulated buses and 88 single decker buses have been supplied to Bangladesh from India. They are plying on the roads of Dhaka and other major cities of Bangladesh. The buses have improved the urban and inter-city transportation and have facilitated travel for the people of Bangladesh.
LOC OF USD 20 MILLION TO MONGOLIA
Under the LOC, India-Mongolia Joint Information Technology Education & Outsourcing Center (IMJIT) Project is being set up. This will result in increased computerisation and enhancing IT skills among the Mongolian youth as well as income generation opportunities through setting up of outsourcing centers.
IN CONCLUSION
Thus, the LOC programme has enabled Indian companies to demonstrate project execution capabilities in the emerging markets, which create, in the recipient countries, a greater visibility for Indian expertise and project execution capabilities, with downstream linkages for export of goods and services thereby furthering the “Make in India” initiative, while creating additional jobs at the same time in India. The projects financed under the LOCs cover a variety of sectors like Agriculture, Transportation, Manufacturing (cement, sugar), Energy (generation, transmission and rural electrification) and Infrastructure. A number of infrastructure/industrial projects have since been financed under the LOCs, such as power generation, transmission and distribution projects in Sudan, Suriname, Ghana, Belarus, Mozambique, Cote d’Ivoire, Ethiopia and Mali, urban transportation projects in Bangladesh and Senegal, Cote d’Ivoire and D.R. Congo, railway projects in Sri Lanka, Senegal, Mali, Myanmar and Angola, telecommunication project in Myanmar, refinery rehabilitation project in Myanmar, sugar industry rehabilitation project in Fiji and Ethiopia, cement project in D.R. Congo and Djibouti.