Dhaka and Delhi will sit later this month to finalise the draft agreement on the proposed US$ 2.0 billion worth of Indian Line of Credit (LoC), paving the way for assistance for Bangladesh, officials said.
The official level meeting, scheduled for the third week of this month, is expected to discuss the terms and conditions of the proposed LoC, they added.
"A meeting will be held in Dhaka on newly proposed LoC worth US$ 2.0 billion," Md Raihan Kabir, Assistant Chief, Section: ASIA-2 of the Economic Relations Division (ERD), told the FE on Friday.
The draft loan agreement is likely to be finalised in the next scheduled meeting, if any disagreement does not arise from the two sides -- the government of Bangladesh and Export Import Bank of India, he added.
Under the LoC, minimum 75 per cent of goods and services need to be of the Indian origin and must be procured from India.
The US$ 2.0 billion LoC is expected to create 50,000 jobs in India and provide a big boost to the government's Make in India drive.
Besides, the newly proposed loan will be repaid in 20 years like the current US$ 1.0 billion Indian LoC.
Raihan Kabir has mentioned that the new LoC will be mostly used in the country's infrastructure sector and the conditions would be almost as same as those on the US$ 1.0 billion LoC.
The proposed loans tied with conditions of import are not helpful for the recipient country. Most goods will have to be procured from India, sources concerned said.
New Delhi in 2010 offered US$ 1.0 billion LoC for Bangladesh's infrastructure development. But five years have already passed.
The country has so far received $205.59 million from Indian EXIM Bank out of $751.95 million cleared by the Indian government. Of the 15 project proposals under the first LoC, 16 contracts involving U$ 351.38 million have so far been approved by EXIM Bank.
An official working at the Economic Relations Division (ERD) said disbursements made by EXIM Bank as of June 30, 2015 amounted to $205.59 million.
The Indian government has provided 225 LoCs to 61 countries under the Development and Economic Assistance Scheme. These LoCs totalling $14.87 billion have been extended to the countries in Africa, Asia, Latin America, Oceania and the CIS.
Over 170 Indian companies have executed or are executing projects worth $7.0 billion under this initiative.
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