1.The Government of Japan today agreed to extend soft loan assistance to seven projects, totaling 155,549 million yen (approximately Rs.8,632 crore). The Exchange of Notes to formalize the arrangements to this effect was concluded on 6 June 2011 at a ceremony held at The Lalit Hotel in New Delhi. The Notes were signed and exchanged between H.E. Mr. Akitaka Saiki, Ambassador of Japan to India, and Mr. Prabodh Saxena, Joint Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, on behalf of their respective Governments. The signing took place in the presence of Mr. Shinichi Nishimiya, Deputy Minister for Foreign Affairs, Government of Japan, and Mr. R. Gopalan, Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, on the occasion of the Japan-India Strategic Dialogue on Economic Issues.

2.The loan package signed today was initially scheduled to be extended in the FY2010. Although it was postponed due to the earthquake which hit Japan in March, the Government of Japan is fully committed to its pledge with the Government of India and, today, Japan extended the loan without any deduction from its previous commitment.

3.The loan package covers seven projects in the areas of power, transportation, afforestation and energy. These concessional loans will be made available through the Japan International Cooperation Agency (JICA), at the interest rate ranging from as low as 0.4% to 1.4% per annum, with the repayment period of 15 to 40 years including the grace period of 5 to 10 years. (See Enclosures for outline of all the seven projects.)

4.India is the largest recipient of Japan’s ODA for FY2010, making itself as the top recipient partner for eight 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 the 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.

* The volume of ODA for FY2010 in this context is counted with this loan package which was requested for FY2010.

Enclosures:
1. List of Projects for the second batch of FY2010
2. Outline of Projects for the second batch of FY2010

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	PROJECT	AMOUNT
		(in million yen)
1.	Andhra Pradesh Rural High Voltage Distribution System Project	18,590
2.	Bangalore Metro Rail Project (II)	19,832
3.	Bihar National Highway Improvement Project	22,930
4.	Madhya Pradesh Transmission System Modernisation Project	18,475
5.	Rajasthan Forestry and Biodiversity Project (Phase 2)	15,749
6.	Micro, Small and Medium Enterprises Energy Saving Project(Phase 2)	30,000
7.	New and Renewable Energy Development Project	30,000
	Total	155,549
※ The Government of Japan extended Engineering Services Loan for Dedicated Freight Corridor (DFC) (Phase 2) of 1,616 million yen in July 2010, and Loan Packages under the first batch of FY2010 of 46,401 million yen in February 2011.

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1. Andhra Pradesh Rural High Voltage Distribution System Project

This project aims for the improvement of the power grid in Andhra Pradesh. The state’s growing demand for electricity reflects the expansion of pumps for irrigation system. Through the improvement of the power distribution, the project is expected to contribute to meet the increasing demand of electricity in the rural area.

2. Bangalore Metro Rail Project (II)

Bangalore is one of the most rapidly developing cities in India and its population has increased enormously. The city is facing the severe problem of traffic congestion and is in need of a mass rapid transport system of metro. On the basis of such a situation, Japan has extended a loan for Bangalore Metro Rail Project in FY2005. Bangalore Metro Rail Project (II) of today is expected to compliment the previous metro project.

3. Bihar National Highway Improvement Project

Around forty percent of all the transportation by road is carried out on national highways, though the four-lane sections are limited to only fourteen percent of all the national highways. In Bihar, the number of vehicles has been increasing rapidly, reflecting its rapid economic growth. Combining these situation altogether, the state needs a speedy solution for improving the national highways to meet its increasing demand for road usage. This project is expected to contribute to lessening of traffic congestion and an investment-friendly environment through the improvement of infrastructure.

4. Madhya Pradesh Transmission System Modernisation Project

One of the major problems with the Indian energy sector is its high rate of loss during the transmission of electricity. Madhya Pradesh is located in the middle of the western region where the electricity demand is highest in India, and has many trunk transformer substations within the state. This project will contribute to the stabilization of electricity distribution not only within Madhya Pradesh but also in the western region of India as a whole.

5. Rajasthan Forestry and Biodiversity Project (Phase 2)

Rajasthan has the largest area in India, though two-thirds of the state is covered by the desert, leading to very low rate of forested area. On the other hand, the state is famous for its rich biodiversity with many parks and sanctuaries for wildlife. Japan has already extended a loan for Rajasthan Forestry and Biodiversity Project in FY2002, and today’s loan is expected to compliment the previous project.

6. Micro, Small and Medium Enterprises Energy Saving Project (Phase 2)

This project aims to promote the energy saving activities of micro, small and medium enterprises by the means of offering medium and long-term loans specially designed to be utilized for energy saving activities by those companies. Accordingly, the project is also expected to contribute to environmental improvement and sustainable economic development in India through the efficient use of energy. The Micro, Small and Medium Enterprises Energy Saving Project was already extended in FY2008 and today’s loan is expected to further strengthen the previous efforts.

7. New and Renewable Energy Development Project

India is the fifth largest country in the world in terms of energy consumption and its demand for energy is increasing rapidly. Though the new and renewable energy is expected to contribute to India in the future, its current share is merely nine percent in the total power generation. This project offers medium and long-term loans specially designed to be utilized for the development of new and renewable energy through IREDA (Indian Renewable Energy Development Agency Limited), and is expected to contribute to narrow the gap between demand and supply in the power sector.