India and the United States moved Friday to formalise ongoing consultations and coordination on development projects in the areas of energy, trade and investment funded through American grants in needy countries; South Asia for now.
Millennium Challenge Corporation, a US government body that funds projects with grants for poverty reduction and sustainable economic growth, and the ministry of external affairs (MEA’s) development partnership administration, will be the operative partners in this effort.
This would be the first such institutionalised coordination by the two countries that have previously worked together only on case-by-case basis such as in some African countries, mostly in agriculture, officials said.
Based on a shared vision, “they intend to cooperate with the goal of advancing their mutual interests to strengthen regional integration and connectivity, particularly in the areas of energy, trade, and investment”, India and the US said in a statement.
MCC can give large grants of up to $5 billion spread over five years to countries that meet the necessary requirement and has been looking at Nepal and Sri Lanka in India’s neighbourhood.
MCC and the MEA have been in consultation for over a year regarding these projects, but around September felt the need to institutionalise it in view “transition” to another administration. “A need was felt to make it formal, legal,” said an official.
MCC is understood to be considering power projects in Nepal, which may not be able to use all of the electricity thus produced. “India can use some of that or as much as they can spare,” the official said, making those projects economically viable.
MCC funds projects with an eye on sustainability, marketability. And India is the biggest market for practically anything and everything in the neighborhood, and has projected itself as one, inviting neighbours to grow a stake in its development.
India also funds development projects in some of these countries through loans, grants and lines of credit — it has committed $1billion, for instance, to help Nepal recover from the devastating earthquake in 2015.
“The idea behind the consultation coordination is also to prevent duplication of our efforts and to work at cross-purpose,” said the official, adding, “and in India’s interest, ensure MCC grants aligned with Indian objectives in the region.”
Thought the joint statement does not define the geographical limits of the cooperation, it is understood to be confined to South Asia mostly, to start with and then they “will see if we can identify other areas going forward”.
The cooperation will entail exchange of information and experience in relevant sectors, providing advisory or technical assistance regarding sector policy reform, project and sector management, project implementation, and economic growth promotion strategies in relevant sectors through “site visits to cross-border or other relevant projects”.
The two parties expect the “cooperation” to continue for five years.