India has offered another $ 1 billion line of credit to Bangladesh at higher interest rate for implementing Bangladesh’s priority development projects.
The country has also offered to provide an additional 500 megawatt electricity to Bangladesh if infrastructures are improved. The offers were made during a two-day joint secretary level meeting of the joint working group on trade that ended in Dhaka on Thursday.
‘In principle, we agreed to provide US$ 1 billion loan, in addition to the ongoing US$ 1 billion line of
credit, to Bangladesh,’ Arvind
Mehta, joint secretary (foreign trade, South Asia) of the Indian department of commerce told reporters after the meeting.
The interest rate of the proposed credit to be funded by Indian Exim Bank and operated through its commerce ministry may be LIBOR (London Interbank Offered Rate) plus 2 per cent to 2.50 per cent, he said.
Commerce ministry officials said that the Indian team just made the offer that Bangladesh can borrow from the fund which is kept for all South Asian countries, but the team did not disclose the terms and conditions of the proposal.
The interest rate for the proposed credit is much higher than the rate for $ 1 billion line of credit the country is providing to Bangladesh.
In 2010, India announced $ 1 billion credit for Bangladesh for implementing 14 development projects, mostly related to development of infrastructures to provide transit to India, at an interest rate of 1.75 per cent.
Later in 2011, the Indian government announced $ 200 million of the $ 1 billion credit as grant and cut down the interest rate for the $ 800 million to one per cent.
Till now, India disbursed only one-third of the loan.
Mehta said that India was ready to provide the proposed loan for 5 years to 15 years term and Bangladesh can utilise it in its priority projects as India has no conditions regarding use of the credit, he said.
An official of the Economic Relations Division told New Age that any loan with an interest rate of 2.5 per cent plus LIBOR was hard-term.
Regarding electricity, he said that in principle India decided to raise energy trade with Bangladesh to 1,000 MW from the existing 500 MW and it is possible through improving existing infrastructures through some small investments.
Indian power ministry will finalise the decision, he said.
Members of the Bangladesh delegation said that both the sides discussed a wide range of issues related to trade and connectivity.
At the meeting, India stressed on finalising some agreements for quick implementation of container train service, coastal shipping service, motor vehicle service between the two countries and both the sides discussed the way forward on these issues, they said.
They also discussed establishing border Haats at Bangladesh-India (Meghalaya) border, development of infrastructure and quality of services at Benapole-Petrapole land port, implementation of cooperation agreement between Bangladesh Standard and Testing Institute and Bureau of Indian Standard.
The Bangladesh side asked its counterpart to effectively eliminate non-tariff barriers to goods from Bangladesh to India, upgrade infrastructure in land customs stations on the Indian side and recognise the certification issued by BSTI against food items, withdrawal of countervailing duty on Bangladeshi readymade garments export to India and not imposing any ban on export of Indian essential commodities to Bangladesh.
Commerce ministry joint secretary Shahabuddin Patwary led the Bangladesh side at the meeting.
-With New Age input
