JBIC signs deals to boost India’s auto sector, help create clean energy
The Japan Bank for International Cooperation (JBIC) has signed two loan agreements worth more than $1 billion with the State Bank of India (SBI) and NTPC Limited for the automobile sector and solar energy as part of the Japanese government’s efforts to back the “Make in India” initiative.
State-run JBIC signed a loan agreement with SBI that will be co-financed with Sumitomo Mitsui Banking Corporation, MUFG Bank, Mizuho Bank, Shizuoka Bank and Bank of Yokohama. JBIC’s portion is up to $600 million and the total co-financing amount is $1 billion.
The loan is aimed at providing funds through SBI for manufacturing and sales businesses of suppliers and dealers of Japanese automobile manufacturers, and for providing auto loans for the purchase of Japanese automobiles, JBIC said in a statement.
JBIC said in a separate statement it had signed a loan agreement for up to 50 billion yen (about $480 million) with state-owned power generation company NTPC Limited to provide funds for solar power projects and installation of environmental equipment in India. Both agreements were signed this week.
JBIC noted that India, the world’s fifth largest automobile market in fiscal 2019 in terms of units sold, is expected to grow further. With Japanese automobile manufacturers accounting for a majority share in India, the country is also an important market for Japanese automobile manufacturers to expand their business overseas, it said.
As the growth of automobile sales is likely to be hindered by the stagnation of economic activities in India due to the Covid-19 pandemic, the loan agreement with SBI will “help promote smooth funds flows for the whole range of business operations of Japanese automobile manufacturers,” JBIC said.
“As Japan’s policy-based financial institution, JBIC will continue to support improvement of Japanese companies’ business environment in India by drawing on its various financial facilities and schemes and performing its risk-assuming function,” it added.
JBIC noted that the automobile industry is the core of the Indian government’s efforts to stimulate domestic manufacturing with its “Make in India” initiative.
JBIC also said its loan agreement with NTPC will support the Indian government’s efforts to preserve the environment. It noted that air pollution is an urgent challenge in India, where coal-fired power continues to account for a large proportion of the energy mix.
Toshihide Ando, the deputy chief of mission at the Japanese embassy, said the loan agreements were part of his country’s efforts to support the “Make in India” initiative and to promote solar energy.