Soft Loan to India

Press Releases - From Embassy
Press Release No.5

NEW DELHI: 17th February, 2011
- The Exchange of Notes for Rs. 2,556 crore loan package was concluded today -

1.The Government of Japan today agreed to extend soft loan assistance to three projects totaling 46,401 million yen (approximately Rs. 2,556 crore). The Exchange of Notes to formalize the arrangements to this effect was concluded on 17 February 2011 at a ceremony held in the Ministry of Finance in New Delhi. The notes were signed and exchanged between H.E. Mr. Hideaki Domichi, Ambassador of Japan to India and Mr. Prabodh Saxena, Joint Secretary, Ministry of Finance, Government of India on behalf of their respective Governments.

2.The loan package covers three projects in the areas of agriculture, afforestation and sewage. These concessional loans will be made available through the Japan International Cooperation Agency (JICA), at the interest rate ranging from even as low as 0.65% to 1.4% per annum with the repayment period of 30 to 40 years including the grace period of 10 years. (See Enclosure for outline of all the three projects.)

3.Besides the infrastructure sector such as power and transportation, the Government of Japan appropriates its funding resources for agriculture as well.

Crop Diversification Project in Himachal Pradesh will benefit the farmers with the rising incomes and Biodiversity Conservation Project in Tamil Nadu will lead to the community development without devastating its environment. Purification of Yamuna River is expected to achieve the improved quality of life of the regional inhabitants.

4.India has been the largest recipient of Japan’s ODA for seven consecutive years since FY2003. This reflects the growing Japan-India development partnership and the importance Japan attaches to the bilateral ties with India.

5.The main objectives of Japanese loan assistance to India are to support India’s efforts to sustain economic growth, to reduce poverty, to build economic and social infrastructure, and to tackle environmental issues.

1. List of Projects for the first batch of FY2010
2. Outline of Projects for the first batch of FY2010

Enclosure - 1



      (in million yen)
1. Himachal Pradesh Crop Diversification Promotion Project 5,001
2. Tamil Nadu Biodiversity Conservation and Greening Project 8,829
3. Yamuna Action Plan Project (III) 32,571
  Total 46,401
※ The Government of Japan extended Engineering Services Loan for Dedicated Freight Corridor (DFC) (Phase 2) of 1,616 million yen in July 2010.

Enclosure - 2

Brief Outline of Yen-Loan Projects for FY 2010 (The First Batch)

1. Himachal Pradesh Crop Diversification Promotion Project

This project aims for the improvement of the small-size irrigation and farm roads as well as the strengthening of farmers’ groups. Himachal Pradesh has a good potential of crop diversification utilizing its climate, though most of the farmers are currently producing only cereal. Through soliciting the stable crop diversification, this project is expected to lead to the uplift of the farmers’ income level.

2. Tamil Nadu Biodiversity Conservation and Greening Project

Tamil Nadu is blessed with rich biodiversity, though approximately 230 species of plants and animals are endangered with extinction. Moreover, many poor communities in the region depend heavily on the forest resources and may give negative impacts on the biodiversity. This project aims for the preservation of biodiversity and the expansion of the forested sites in Tamil Nadu. It is eventually expected to contribute to the environment conservation and balanced development of regional community.

3. Yamuna Action Plan Project (III)

The Government of Japan already provided ODA soft loans for the Yamuna Action Plan project in FY1992 (17,773 million) and FY2002 (13,333 million). Due to industrialization and the rapid inflow of population into the urban area, there is an urgent need to purify Yamuna River. In order to improve the water qualification of Yamuna River, it is highly important to upgrade the sewage utilities in National Capital Region of Delhi. Through the improvement of those facilities, this project contributes to the purification of Yamuna River and the improvement of sanitary environment for the inhabitants in the region.