World Economy

India Gives $2b Credit Line to Bangladesh

India Gives $2b Credit Line to Bangladesh
India Gives $2b Credit Line to Bangladesh

What is good for Bangladesh is good for India. The government is extending a $2-billion line of credit to Dhaka which is expected to create 50,000 jobs in India and provide a big boost to the 'Make in India' drive.

A Credit Line is a promise to provide loans at subsidized rates from agencies such as Exim Bank. These are normally conditional on the recipient using the loan amount to buy equipment and services from Indian entities like BHEL, RITES and small and medium enterprises, PTI reported.          

"We have already provided $862 million line of credit to Bangladesh and this $2 billion is going to provide a big boost to project exports from India and help Indian companies," Yaduvendra Mathur, chairman and managing director of Export Import Bank of India, told TOI.

He said the line of credit will also provide a huge boost to sectors like steel and cement as they will be exported to Bangladesh for the projects undertaken there. "It is a big boost not only to manufacturing and projects but also to create jobs," Mathur said.

Since taking over Prime Minister Narendra Modi has extended nearly $6 billion line of credit under his 'Look East' policy to Nepal, Bangladesh, Sri Lanka and the Maldives.

The Exim Bank has set up a special infrastructure facility in its Delhi office to route the projects from India and is working closely with the ministry of external affairs on boosting project exports.

Under the LoC, a minimum of 75% of goods and services needs to be of Indian origin and must be procured from India. 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 firms to demonstrate their project execution capabilities, according to Mathur.

Stating that he was conscious of the huge trade imbalance, Modi assured that India would do everything to bridge the deficit between the two neighboring nations.

“I have assured the prime minister that we will do everything we can to bridge the deficit,” he said during a joint press briefing with his Bangladeshi counterpart Shaikh Hasina in Dhaka.

Territory Swap Deal

Bangladesh and India have signed a historic agreement to simplify their border by exchanging more than 150 enclaves of land.

Modi ratified the deal with his Sheikh Hasina.

Thousands of Bangladeshis inhabit more than 50 enclaves in India, while Indians live in around 100 areas within Bangladesh.

The countries will now swap territories and residents can choose where to live. "We have resolved a question that has lingered since independence. Our two nations now have a settled boundary," Modi said at a press conference.

"We are not just neighbors, but nations bound by the threads of history, religion, culture, language and kinship – as well as a passion for cricket."

Bangladesh Foreign Minister Abul Hassan Mahmood Ali described the agreement as "a historic milestone in the relationship between the two neighboring countries".