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Gov’t planning the introduction of new lending scheme to India for subway construction

  • 2016-02-19 15:00:00
  • , Sankei
  • Translation

(Sankei: February 19, 2016 – p. 1)

 

 The government is planning to introduce a low-rate yen lending program to India by limiting it to construction of subways, a source familiar with the matter revealed on Feb. 18.

 

 Under this new scheme, India will be offered yen loans at an annual interest rate of 0.3%. The conventional rate is set at 1.4% with a repayment period of 30 years. The program will become available in the form of “bilateral tied loans” and will limit procurement sources to the two countries. The government hopes to win subway projects in the country within fiscal 2016 and expects the program to help Japanese companies tap into the world’s largest subway rail market.

 

 Moves are already underway to win India’s subway projects. In the middle of this month, the Ministry of Economy, Industry and Trade sent a group of Japanese rail car makers and signal manufacturers to India to carry out a preliminary survey. The Japan International Cooperation Agency (JICA) will this month begin a technological survey on the planned construction of six lines for Delhi Metro, Chennai Metro and other subway systems together with four Japanese consultant firms.

 

 Japan has extended yen loans for construction of subway systems in India’s major cities, such as Delhi, Mumbai and Kolkata, but in international bidding, Japanese firms lost against foreign rivals due to cost disadvantages.

 

 In Asia, Japan offers a special program that lends money at low interest rates on the condition that Japanese companies become procurement sources. India has been reluctant to accept this condition due to its national push to strengthen its manufacturing industry. But building public transportation systems is becoming a pressing issue in the country, as its rapid urbanization and traffic jams are aggravating air pollution. Plans are underway to build 27 subway lines, including the six projects for which Japan will conduct a survey. (Abridged)

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