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Export Credit Line for State Bank of India
Supporting Export of Machinery and Equipment for Power Plant by Japanese Companies

  • Region: Asia
  • Infrastructures
  • Machinery and Equipment
  • Export Loans

September 2, 2014
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on September 1, taking an opportunity of Prime Minister of India, H.E. Narendra Modi's official visit to Japan, a loan agreement to set up an export credit line amounting up to approximately JPY8.1 billion (JBIC portion) and approximately USD12 million (JBIC portion), with the State Bank of India (SBI), the largest state-owned commercial bank in India. The loan is cofinanced with The Bank of Tokyo-Mitsubishi UFJ, Ltd., which brings the total cofinancing amounts to approximately JPY13.5 billion and approximately USD21 million. Nippon Export and Investment Insurance (NEXI) will provide insurance for the portion cofinanced by The Bank of Tokyo-Mitsubishi UFJ, Ltd. The signing of this loan agreement between JBIC and SBI is welcomed in the Fact Sheet: "India and Japan-Partners for Common Development" issued along with the Japan–India Joint Statement "Tokyo Declaration for Japan-India Special Strategic and Global Partnership" dated September 1, 2014.
     
  2. The loan is intended to finance through SBI the procurement of steam turbine generator equipment from Toshiba Corporation and Toshiba JSW Power Systems Private Limited, Toshiba's subsidiary in India, as Meja Urja Nigam Private Limited (MUNPL)*1 will construct a super critical pressure coal-fired power plant (660 MW × 2 units) in Meja, Uttar Pradesh Province located in the northern India.
     
  3. The Indian economy has continued to grow quickly in recent years, and chronic power shortages due to the lagging behind of the construction of power stations complying with the increased power demand is a big challenge for Japanese companies deploying their businesses in India.*2 Given the circumstance, the government of India set a high priority on the development of power supply and plans a large-scale electricity facilities reinforcement under the 12th five-year economic plan (2012-2017). Over 80% of the expected increase in power supply will come from the high efficiency coal-fired power generation with abundant supply of domestic coal, and it is expected to an expanding business opportunity for Japanese companies with the advanced technologies in this field.  
     
  4. SBI, the largest state-owned commercial bank in India in terms of assets established in 1806, is the prominent lender in the power sector and project financing in India.  Since the 1990s, JBIC and SBI have built up close cooperative ties through loans to support exports of machinery and equipment from Japan to India. Recently, in August, 2012*3, JBIC has signed a memorandum of understanding (MOU) on an institutional framework for supporting mid-tier enterprises as well as small and medium-sized enterprises (SMEs) to expand business operations into India, and also in May, 2013*4, signed a loan agreement for credit line under GREEN operations*5 supporting energy efficiency and renewable energy projects in India where the advanced Japanese technologies for environmental protection are actively exploited. This bank-to-bank export loan will further strengthen relations between the two institutions, amid the expectations for various cooperative opportunities in infrastructure and other sectors. 
     
  5. As Japan's policy-based financial institution, JBIC will continue to support the export of machinery and equipment and overseas business deployment of Japanese companies, in cooperation with overseas local financial institutions, by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function. 
Note
  1. *1 MUNPL is a joint venture equally invested by NTPC Limited and Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited.
  2. *2 According to the "FY2013 Survey (the 25th) Report on Overseas Business Operations by Japanese Manufacturing Companies"conducted by JBIC, approximately 60% of the Japanese companies running projects in India indicated problems with power infrastructure in the country. For the detail, please see press release on 29 November, 2013.
  3. *3 See Press Release on August 31, 2012.
  4. *4 See Press Release on May 30, 2013.
  5. *5 See Information on April 27, 2010.

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