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US EXIM Bank plans to step up funding for India to $1.4 billion from $53 million

19 Jul 2011 Evaluate

The US Export Import Bank has tripled the funding to India to $1.4 billion from $53 million so far this year, this increase in funding is in order to expand US exports footprint in India. The US EXIM bank chairman has come along with US Secretary of State Hilary Clinton who is on a three day visit to India.

The US EXIM bank’s Chairman Fed P Hochberg on July 18 said that India is the second largest destination of US EXIM funding and the largest in Asia. Currently, US EXIM bank’s gross exposure in India is around $5.5 billion, which include funding of Air India’s purchase of Boeing 787 Dream liner, beside this, US EXIM banks’ exposure in India include sectors like aviation, power projects, oil and gas, information and manufacturing sectors.

On the issue of US EXIM’s lending rate, Hochberg said that the interest rates are determined by the OECD conventions, which also govern the EXIM bank. However by adding further he said “Our lending rates are 100 basis points above the US treasury rate.” Three month US treasury rates are presently less than 0.1%. Therefore effective lending rates currently would be in the region of about 1.1%.

US EXIM bank sees huge opportunity of investment in Indian infrastructure sector; Hochberg said that US can support India’s infrastructure building efforts with long term financing and technology. Business in Indian infrastructure is expected to be around $1 trillion.

However, Hochberg said that EXIM bank will fund only in environment friendly project, EXIM bank support was not intended to adversely impact on domestic unemployment. At the same time EXIM bank was also not prepared to accept job losses in the US. “We don’t want to see loss of jobs in the US or in India” he added.

Overseas Private Investment Corporation (OPIC), a development finance institution of the US Government will also increase the investment in the current year. OPIC president and chief executive, Elizabeth Littlewood, who is also a part of US Secretary of State Hilary Clinton delegation said, OPIC’s funding including guarantees will end this year at about $750 million, as of now in this years, OPIC has invested $250 million.

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