Exchange of Notes concerning Yen Loans for Six Projects in India
2025/3/28
On March 27, Mr. ONO Keiichi, Ambassador of Japan to India, and Ms. Manisha Sinha, Additional Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, exchanged notes in New Delhi, concerning the provision of yen loans of up to a total of 191.736 billion yen for the following six projects. Added to Mumbai Metro Line 3 Project (V) signed in July 2024, total amount of loans inked in this fiscal year reaches 275.997 billion yen (about Rs. 15,655 Crore).
1. Overview of the Yen Loan Projects
(1) Tamil Nadu Investment Promotion Program (Phase 3) (loan provision of up to 34.537 billion yen)
Tamil Nadu, located in southeastern India, is a hub for manufacturing industries due to its abundant labor force and consistent foreign investment attraction policies. Additionally, it has multiple large ports suitable for exports and imports, attracting many Japanese companies. The improvement of policies and systems related to promoting private investment will help its investment inflow further.
This program aims to improve policies and systems related to promoting private investment and industrial development in the state, along with supporting infrastructure, human resource development, and the greening of industries, thus improving the investment environment in Tamil Nadu. It is expected to lead to an increase in foreign direct investment.
(2) Project for Capacity Enhancement for Effective Forest Management (loan provision of up to 8.28 billion yen)
In India, due to population growth and rapid urbanization, forests are degrading and decreasing, posing threats to biodiversity. There are also concerns about the reduction in carbon absorption, decreased resilience to landslides, and the decline of water purification functions.
This project aims to strengthen the policy implementation abilities of India's forest administrators by conducting research and pilot projects related to forest and biodiversity conservation, as well as improving training systems across India. It is expected to contribute to India's sustainable development.
(3) Project for Construction of Chennai Seawater Desalination Plant (II) (loan provision of up to 8.28 billion yen)
In the Chennai metropolitan area of Tamil Nadu, southern India, population growth and economic development are outpacing the development of water supply systems, causing demand for water to far exceed the supply. The severe water shortage significantly impacts the investment environment, including many foreign companies, including Japanese firms.
This project aims to improve safe and stable water supply services in the metropolitan area by constructing and enhancing seawater desalination facilities and water distribution systems. It is expected to improve the living conditions of local residents and the investment environment.
(4) Delhi Mass Rapid Transport System Project (Phase 4 Additional Corridors) (I) (loan provision of up to 79.726 billion yen)
Due to rapid urbanization in recent years, major cities such as Delhi and Mumbai are experiencing large-scale traffic congestion, leading to economic losses, as well as exacerbating air pollution and noise pollution from automobiles.
This project aims to address the increasing transportation demand by constructing a mass rapid transit system (metro) in the Delhi metropolitan area. It is expected to ease traffic congestion, reduce automobile pollution, foster regional economic development, improve urban environments, and ultimately mitigate climate change.
(5) Assam State Aquaculture Promotion and Livelihood Improvement Project (loan provision of up to 3.58 billion yen)
Assam, the largest state in northeastern India, is rich in water resources and has a thriving inland fisheries industry (including aquaculture) that captures aquatic products in freshwater (rivers, lakes, etc.). However, due to insufficient technology and infrastructure for aquaculture, the state imports aquatic products from outside the state and abroad.
This project aims to increase aquaculture production and improve the livelihoods of those involved in the industry by promoting aquaculture, supporting the construction of a fisheries supply chain, and strengthening the capabilities of the state fisheries department. It is expected to contribute to the socio-economic development of Assam.
(6) Punjab Biodiversity and Natural Resources Conservation Project (loan provision of up to 11.48 billion yen)
In Punjab, located in northern India, population growth and urbanization have led to forest reduction, decreasing the tree cover rate (the proportion of land covered by trees in a given area). Consequently, biodiversity is threatened, and there are concerns about reduced carbon absorption, decreased resilience to landslides, and declining water purification functions.
This project aims to improve ecosystem services and promote climate change measures (adaptation and mitigation) in the state by enhancing tree cover through afforestation, conserving biodiversity, managing wetlands, and strengthening the organizational base of the forestry department. It is expected to contribute to the sustainable socio-economic development of Punjab.
2. Terms and Conditions of the Loans
(1) For project (1) in 1 above:
a. Interest Rate: 2.45% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(2) For project (2) in 1 above:
a. Interest Rate: 2.25% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(3) For project (3) in 1 above:
a. Interest Rate: 2.45% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(4) For project (4) in 1 above:
a. Interest Rate: Variable rate (TORF + 90bp) (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(5) For project (5) in 1 above:
a. Interest Rate: 1.70% per annum (0.55% per annum for consulting services)
b. Repayment Period: 15 years (including a 5-year grace period)
c. Procurement Terms: General Untied
(6) For project (6) in 1 above:
a. Interest Rate: 2.25% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
1. Overview of the Yen Loan Projects
(1) Tamil Nadu Investment Promotion Program (Phase 3) (loan provision of up to 34.537 billion yen)
Tamil Nadu, located in southeastern India, is a hub for manufacturing industries due to its abundant labor force and consistent foreign investment attraction policies. Additionally, it has multiple large ports suitable for exports and imports, attracting many Japanese companies. The improvement of policies and systems related to promoting private investment will help its investment inflow further.
This program aims to improve policies and systems related to promoting private investment and industrial development in the state, along with supporting infrastructure, human resource development, and the greening of industries, thus improving the investment environment in Tamil Nadu. It is expected to lead to an increase in foreign direct investment.
(2) Project for Capacity Enhancement for Effective Forest Management (loan provision of up to 8.28 billion yen)
In India, due to population growth and rapid urbanization, forests are degrading and decreasing, posing threats to biodiversity. There are also concerns about the reduction in carbon absorption, decreased resilience to landslides, and the decline of water purification functions.
This project aims to strengthen the policy implementation abilities of India's forest administrators by conducting research and pilot projects related to forest and biodiversity conservation, as well as improving training systems across India. It is expected to contribute to India's sustainable development.
(3) Project for Construction of Chennai Seawater Desalination Plant (II) (loan provision of up to 8.28 billion yen)
In the Chennai metropolitan area of Tamil Nadu, southern India, population growth and economic development are outpacing the development of water supply systems, causing demand for water to far exceed the supply. The severe water shortage significantly impacts the investment environment, including many foreign companies, including Japanese firms.
This project aims to improve safe and stable water supply services in the metropolitan area by constructing and enhancing seawater desalination facilities and water distribution systems. It is expected to improve the living conditions of local residents and the investment environment.
(4) Delhi Mass Rapid Transport System Project (Phase 4 Additional Corridors) (I) (loan provision of up to 79.726 billion yen)
Due to rapid urbanization in recent years, major cities such as Delhi and Mumbai are experiencing large-scale traffic congestion, leading to economic losses, as well as exacerbating air pollution and noise pollution from automobiles.
This project aims to address the increasing transportation demand by constructing a mass rapid transit system (metro) in the Delhi metropolitan area. It is expected to ease traffic congestion, reduce automobile pollution, foster regional economic development, improve urban environments, and ultimately mitigate climate change.
(5) Assam State Aquaculture Promotion and Livelihood Improvement Project (loan provision of up to 3.58 billion yen)
Assam, the largest state in northeastern India, is rich in water resources and has a thriving inland fisheries industry (including aquaculture) that captures aquatic products in freshwater (rivers, lakes, etc.). However, due to insufficient technology and infrastructure for aquaculture, the state imports aquatic products from outside the state and abroad.
This project aims to increase aquaculture production and improve the livelihoods of those involved in the industry by promoting aquaculture, supporting the construction of a fisheries supply chain, and strengthening the capabilities of the state fisheries department. It is expected to contribute to the socio-economic development of Assam.
(6) Punjab Biodiversity and Natural Resources Conservation Project (loan provision of up to 11.48 billion yen)
In Punjab, located in northern India, population growth and urbanization have led to forest reduction, decreasing the tree cover rate (the proportion of land covered by trees in a given area). Consequently, biodiversity is threatened, and there are concerns about reduced carbon absorption, decreased resilience to landslides, and declining water purification functions.
This project aims to improve ecosystem services and promote climate change measures (adaptation and mitigation) in the state by enhancing tree cover through afforestation, conserving biodiversity, managing wetlands, and strengthening the organizational base of the forestry department. It is expected to contribute to the sustainable socio-economic development of Punjab.
2. Terms and Conditions of the Loans
(1) For project (1) in 1 above:
a. Interest Rate: 2.45% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(2) For project (2) in 1 above:
a. Interest Rate: 2.25% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(3) For project (3) in 1 above:
a. Interest Rate: 2.45% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(4) For project (4) in 1 above:
a. Interest Rate: Variable rate (TORF + 90bp) (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied
(5) For project (5) in 1 above:
a. Interest Rate: 1.70% per annum (0.55% per annum for consulting services)
b. Repayment Period: 15 years (including a 5-year grace period)
c. Procurement Terms: General Untied
(6) For project (6) in 1 above:
a. Interest Rate: 2.25% per annum (0.55% per annum for consulting services)
b. Repayment Period: 30 years (including a 10-year grace period)
c. Procurement Terms: General Untied