PROJECT FRONTLINE Supporting the Indian health sector during the pandemic through Quad collaboration
JBIC signed a loan agreement in May 2022, for the improvement of the healthcare sector in India, as a novel financial outcome of Japan-Australia-India-U.S. (Quad) efforts. MIKITA Satoshi, the project leader, shares the story.
Deputy Director General of the Social Infrastructure Finance Department, Infrastructure and Environment Finance Group
MIKITA Satoshi Joined JBIC in 1997. Served as a senior representative in Washington, D.C., and as a senior researcher at the SI-PI Promotion Office of the Hitachi Research Institute. Has been involved in projects in the global market for railroads, urban transportation, waste power generation, and water projects, as well as country assignments in the U.S., Canada, and other countries. Graduated from the Faculty of Law, Hitotsubashi University.
JBIC’s first loan for COVID-19 vaccine production
“This project epitomizes JBIC’s vision, ‘supporting your global challenges,’” says MIKITA Satoshi, Deputy Director General of the Social Infrastructure Finance Department, who shaped the project into reality. The loan was extended to the Export-Import Bank of India (EXIM-India) for the purpose of boosting the production of COVID-19 vaccines, therapeutic drugs, etc., through financial support for local pharmaceuticals and others.
“This financing involved the expansion of medical equipment production and the development of medical facilities as well as vaccine manufacturers. Against the backdrop of the pandemic, this financial support had a meaningful aim of underpinning India’s economic development by raising the standards of the Indian healthcare sector and of improving the business environment for Japanese companies operating in India.”
India is a global manufacturing center for vaccines, exporting to countries across Southeast Asia and Africa. Boosting its vaccine manufacturing capacity with this loan will therefore benefit the health of people not only in India but also far beyond its borders.
“Our role is not only to lend money. We need to think about what we can do beyond this, for the economic development of partner countries and the world, and this project reminded me of that. This was JBIC’s first financing for a wide range of sectors related to vaccine production during the pandemic,” adds MIKITA.
One of the unique features of this project was that the diplomatic agenda of strengthening the Japan-Australia-India-U.S. partnership made headway through this cooperation to support India’s healthcare sector. This unique aspect was perhaps something only JBIC ― Japan’s policy-based financial institution ― could work through.
Even today, India’s COVID-19 booster vaccination rate is less than 20%. Continued support is essential.
Five-hour online meetings were held due to pandemic-related travel restrictions
To realize a “free and open Indo-Pacific,” the Quad partners are committed to cooperating in a wide range of areas to contribute to the region. At the first Quad Leaders’ Meeting, held (online) in March 2021, the four countries identified the response to the pandemic as “the most urgent of global challenges.” In this context, they agreed to work together to strengthen India’s vaccine manufacturing capacity and to utilize their financial institutions including JBIC.
This project was therefore highly significant and involved political dynamics in terms of promoting cooperation at the government level, and so negotiations had to be conducted from multiple perspectives. “While difficult, the project also allowed us to experience firsthand the excitement of working as a policy-based financial institution.”
In addition to negotiating the details of the agreement with EXIM-India, it was also essential to discuss the positioning of this loan within the Quad framework with the U.S. Given the travel restrictions due to the pandemic, online meetings were held with representatives from EXIM-India for over five hours each day in the lead-up to the signing of the loan agreement. Careful local negotiations by JBIC representatives working in New Delhi were also a success, and the contract was concluded in time for the Quad Leaders’ Meeting in Tokyo in May 2022.
MIKITA Satoshi talks about the project.
Supporting the overseas expansion of regional banks ― toward the expansion of lending to India
The loan was co-financed by JBIC, MUFG Bank, The Hachijuni Bank, and The Bank of Kyoto. MIKITA described the role of JBIC in supporting the overseas expansion of regional banks as follows:
“For regional banks that do not have extensive international operations, there are risks in developing overseas business on their own. We would like them to initially partner with government-affiliated financial institutions such as JBIC to facilitate their overseas expansion through co-financing arrangements where we can provide loan guarantees.”
An increasing number of regional banks are looking overseas for a variety of reasons, such as to expand their business or to support the overseas expansion of local companies. This project provided an opportunity for regional banks to expand their business into India.
FURUYA Toshihiro, one of the project members. Under MIKITA’s leadership, FURUYA underwent tough negotiations with EXIM-India. He recalls, “It was a significant project that involved both geopolitics and international policy.”
While there were few loan projects to India until about five years ago, the number of projects has been increasing recently, mainly due to strengthened governance on the Indian side. India faces a number of challenges, including a disparity between its economic growth and electricity demand, and its heavy dependency on coal-fired power generation. As India moves forward with decarbonization and other initiatives, JBIC’s involvement in the telecommunications and agriculture sectors may increase, as well as in the renewable energy sector.
This financing project produced a range of results, including stronger Quad coordination on the diplomatic front and overseas expansion of Japan’s regional banks.
“This project has opened up new avenues for financial support to India, which has a lot of potential for growth. With our lending and equity capacity, we will continue to leverage the strengths of Japan, such as its technological capabilities, to meet India’s challenges.” MIKITA believes the future is bright.
MIKITA Satoshi, Deputy Director General of the Social Infrastructure Finance Department, Infrastructure and Environment Finance Group, JBIC (left), FURUYA Toshihiro, Deputy Director of the Division 1, Social Infrastructure Finance Department, Infrastructure and Environment Finance Group (right)
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