Japan Bank for International Cooperation (JBIC) has signed a bank-to-bank loan agreement for setting up an export credit line totalling up to the equivalent of US$70mn with the State Bank of India (SBI), the largest state-owned commercial bank in India.  The loan is denominated both in Japanese yen as well as US dollars.

This loan is provided as a credit line to SBI to enable it to finance local firms in India, one of the BRICs, and Sri Lanka, which has signed a FTA with India, as they import machinery and equipment from Japanese exporters.




The loan thus aims at helping Japanese firms to increase their exports to these two countries, as well as to secure their international competitiveness. Since the loan is denominated in Japanese yen and US dollars, it is expected to be highly useful for local importers operating in India and Sri Lanka, thereby boosting business transactions between Japan and these countries.

Since embarking on economic reform in 1991, India has recorded robust growth. In 2005, its GDP grew 8.4%, and close to 8% growth is also projected for 2006 and beyond. This means there will be increasing demand for capital investment, as the Indian economy set its sights on sustainable development.

It was under these circumstances that Prime Minister Koizumi and Prime Minister Manmohan Singh of India decided to strengthen the Japan-India Global Partnership through an Eight-fold Initiative during Koizumi’s official visit to India in April 2005.

The initiative set out various measures to broaden and deepen the bilateral economic, trade and cooperative ties between Japan and India, raising expectations for further expansion and diversification of bilateral trade.