The government decided on Sept. 9 to implement a unique yen-loan program to help India’s western state of Gujarat with multiple infrastructure projects. Prime Minister Shinzo Abe will announce this plan when he meets with Indian Prime Minister Narendra Modi during his tour of the South Asian nation on Sept. 13-15. Yen loans are usually extended to finance individual projects. But this time the government hopes that offering comprehensive financial aid for several projects at the same time will make it easier for Japanese companies to expand their operations there.
At present, Gujarat is home to about 50 Japanese firms.
The new yen loan scheme, known as a “programing loan,” will be extended to selected infrastructure projects, such as ports and road construction, that Japanese firms want to participate in based on requests from the state government. The amount of funds will be discussed later on. The Japanese side will call on the state government to improve the investment environment for Japanese businesses.
In November, the Japan External Trade Organization (JETRO) will open a new office in Ahmedabad, a major city in Gujarat, to survey the needs of smaller firms operating in the area.
The Japan International Cooperation Agency (JICA), which is in charge of extending yen loans, will hold discussions with the state government to set priorities for selecting infrastructure projects. In the past it has extended a programing loan worth about 35 billion yen to help Tamil Nadu, a state located in Southern India, with port construction and other projects. It will capitalize on this experience to finance projects in Gujarat. (Abridged)