Cabinet approves MoU for $9 bn export credit from Korea

The Dollar Business Bureau

The Cabinet has approved a proposed agreement for export credit of $9 billion between Export-Import Bank of India (EXIM Bank) and Export-Import Bank of Korea (KEXIM) for infrastructure development in the country and for supplying goods and services as a part of project in other nations.

“The Cabinet, chaired by the Prime Minister Narendra Modi, has approved the proposed memorandum of understanding (MoU) between Export-Import Bank of India (EXIM Bank) and Export-Import Bank of Korea (KEXIM) for export credit of $9 billion for infrastructural development in India and for the supply of goods and services as part of projects in third countries,” said an official statement.

The MoU is likely to be signed between the two sides when Finance Minister Arun Jaitley visits Korea from June 14-15 for Annual Financial Bilateral Dialogue.

The decision is likely to promote international exports, and strengthen political and financial relations between the two countries, the statement said.

The export credit facility will be used in India through lending by the EXIM Bank to promote priority sector projects, including railways, smart cities, power generation and transmission, and for supplying goods and services from India and Korea as a part of the project in others countries.

Both the parties to the agreement will have mutual consultations on the structure of financial assistance and assess the existing arrangements and other related processes, the statement said.

“EXIM Bank will identify viable projects in India. For projects in third countries, both parties will jointly identify viable projects,” it added. 

During the visit of Prime Minister Narendra Modi to South Korea in 2015, a joint statement was issued that stated Seoul intends to offer $10 billion for infrastructure development in India.

Subsequently, the package was prepared consisting of $1 billion from South Korean Economic Development Cooperation Fund (EDCF) as a part of government-to-government financing and $9 billion from KEXIM as export credit.