The Japan Bank for International Cooperation (JBIC; Governor: HAYASHI Nobumitsu) signed on October 30 a loan agreement amounting to up to USD60 million (JBIC portion) with ICICI Bank Limited (ICICI Bank), one of the leading private sector banks in India. The loan is co-financed with Sumitomo Mitsui Banking Corporation and the Bank of Fukuoka, Ltd., bringing the total co-financing amount to USD100 million. JBIC will also provide a guarantee for the portion co-financed by the private financial institutions.
The loan provides funds to ICICI Bank to support the manufacturing and sales businesses of the local suppliers and dealers that form the supply chain of Japanese agricultural machinery manufacturers, and also for the local sales finance businesses to sell Japanese farm equipment.
The Government of India is striving to stimulate domestic manufacturing of agricultural machinery under its “Make in India” initiative. It also announced the Sub-Mission on Agriculture Mechanization scheme in 2014–2015, which aims to modernize India’s agriculture by promoting the mechanization of small-scale farms and is implementing the scheme to address the urgent issue of growing food demand. India’s agricultural machinery market, one of the largest in the world by units sold, is expected to further expand against the backdrop of surging food demand driven by population growth. Given its growth potential and significance as a hub for exports to the Global South countries, Japanese agricultural equipment makers position India as an important base.
Through the leading local bank, the loan will provide comprehensive financial support for the general manufacturing and sales activities of Japanese farming machinery manufacturers in India, thereby contributing toward maintaining and improving the international competitiveness of Japanese industry as well as strengthening supply chain resilience. The loan will enhance the supply chain resilience of Japanese agricultural equipment makers in India. It will also align with the Indian government's policy in the food sector.
As Japan's policy-based financial institution, JBIC will continue to support improving the business environment of Japanese companies in India by drawing on its various financial facilities and schemes for structuring projects and by performing its risk-assuming function.
