The export credit agencies of India (India Exim) and South Korea (Kexim) have signed an agreement to provide lending worth US$9bn for infrastructure projects in India.

The deal will see Korean companies investing in Indian projects in the areas of smart cities, railways, power generation and transmission, as well as allowing for a huge increase in the flow of goods between the two countries.

The funding will come from Kexim and will be in the form of export credit, extended to projects with a certain level of Korean import content. India Exim can partner with Kexim on the deals as part of the agreement, but Kexim also retains the right to operate unilaterally.

As part of the memorandum, the agencies may also collaborate on separate projects in third-party countries, which would see both supporting their respective domestic companies.

India has been actively courting international investment in its economy. Under Prime Minister Narendra Modi, the country is striving to improve its trade infrastructure. The plans require huge volumes of foreign capital: it’s estimated that the infrastructure programme will cost some US$646bn over the next five years.

One possible problem in attracting this investment has been difficult investment conditions. Modi has been working to make India easier to invest in, amid concerns over bureaucracy and trade inefficiency. For example, India has only recently moved to the single window customs system.

A number of export credit agencies have been active in India as part of these ventures, including US Exim (pre-Trump) and a number of the Europeans. Korea’s agencies, led by Kexim, have been traditionally active in India and this will be seen as a boost to their companies working there.

The latest agreement is a follow on from an earlier one. A joint statement was issued in 2015, during Modi’s visit to Korea. This laid out plans for Kexim to invest US$9bn in India’s infrastructure plans, as well as a US$1bn development loan, from the Korean government.