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The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu) signed on June 30 a loan agreement amounting to up to approximately JPY23.1 billion (JBIC portion) with the State Bank of India (SBI). The loan is co-financed with Mizuho Bank, Ltd., Sumitomo Mitsui Banking Corporation, and the Bank of Yokohama, Ltd., bringing the total co-financing amount to approximately JPY71.1 billion. JBIC will provide guarantee for a part of the loan provided by the private financial institutions.
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The loan is intended to provide the funds necessary for SBI to support overseas business operators involved in supply sources and sales networks that form part of the supply chain of Japanese automakers, as well as to finance infrastructure development projects, such as EV charging stations. JBIC has provided loans to enhance the supply chain resilience of Japanese automobile manufacturers in India to SBI twice since October 2020
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The government of India is striving to stimulate domestic manufacturing with its “Make in India” initiative, and the automobile industry is the core of such manufacturing. The government has also set a goal of achieving carbon neutrality by 2070, and competition in the Indian market is intensifying amid the shift toward decarbonization. In response, Japanese automotive manufacturers are focusing on manufacturing and selling eco-friendly vehicles in India to maintain and increase their market share. As Japanese carmakers plan to expand their production capacity in India with the aim of manufacturing more green vehicles, including EVs and hybrid models, the demand for financing is expected to grow. This funding will be used to provide additional funds to suppliers and dealers, and to finance infrastructure development, including EV charging stations.
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The loan will financially support the manufacturing and sales activities in India conducted by suppliers and dealers of Japanese automobile manufacturers, the sales of environmentally friendly vehicles manufactured by Japanese companies, and the development of infrastructure such as EV charging stations. Thus, it will contribute toward maintaining and improving the international competitiveness of Japanese industry. In addition to supporting the development of supply chains in India for Japanese automakers, this loan also promotes the adoption of eco-friendly vehicles in the country. These efforts are in line with India's environmental conservation policies and its initiatives to localize the automotive industry's supply chains.
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As Japan's policy-based financial institution, JBIC will continue to actively support the improvement of Japanese companies' business environment in India by drawing on its various financial facilities and schemes, and by performing its risk-assuming function.
