EXIM Banks of India and Korea sign MOU for export credit of USD 9 billion to support infrastructure development in India
The Export-Import Bank of India (EXIM Bank) and the Export-Import Bank of Korea (KEXIM) have signed a Memorandum of Agreement (MoU) for export credit of USD 9 billion to support infrastructural development in India and for the supply of goods and services as part of projects in third countries. The agreement was signed during the visit of the Indian Finance Minister to South Korea during 14-15 June 2017. EXIM Bank and KEXIM are public sector entities, which act as the leading export credit agencies in India and South Korea respectively.
The export credit will be utilised for promoting projects in priority sectors in India, including smart cities, railways, power generation and transmission etc., through lending by EXIM Bank. It will also be used for the supply of goods and services from India and Korea as part of projects in third countries.
The parties to the MoU, the two export-import banks, will hold consultations to structure the financial assistance, review the existing arrangements and related procedures. EXIM Bank will identify viable projects in India. The two parties will jointly identify viable projects in third countries. .
The USD 9 billion would be extended by KEXIM by way of Investment Credit (typically export credit facility to finance projects with a certain level of Korean import content and interest rates as per OECD export credit guidelines). This amount may also be utilized by KEXIM as the financier without the participation of EXIM Bank subject to satisfaction of the purpose.
This MoU will enable the additional avenue of the supply of goods and services from India and Korea as part of projects in third countries. It will help in exchanging mutual experience, sharing information on financing export and import operations, project assessment and knowledge generated in respective fields of activities.
This agreement is based on a joint statement issued in 2015 during the visit of the Indian Prime Minister to the Republic of Korea, which stated that Korea intends to offer USD 10 billion for infrastructure development in India. The package was subsequently prepared to comprise of USD 1 billion from the South Korean Economic Development Cooperation Fund (EDCF) as government to government funding and USD 9 billion as export credit from KEXIM.