New Delhi: India and the US on Monday signed the Investment Incentive Agreement (IIA) that is expected to lead to enhanced investment support from America’s development finance institution in a wide range of sectors.
The IIA was signed in Tokyo by foreign secretary Vinay Kwatra and Scott Nathan, the chief executive officer of the US International Development Finance Corporation (DFC). The agreement is a legal requirement for DFC to continue providing investment support in India, the external affairs ministry said.
The agreement supersedes another similar pact signed between the governments of India and the US in 1997. There have been significant developments since the signing of the earlier agreement, including the creation of DFC, which acts as the US government’s development finance agency and is a successor to the erstwhile Overseas Private Investment Corporation (OPIC).
The IIA was signed to “keep pace with the additional investment support programmes offered by the DFC, such as debt, equity investment, investment guaranty, investment insurance or reinsurance, feasibility studies for potential projects and grants”, the ministry said.
“It is expected that signing of IIA would lead to enhanced investment support provided by DFC in India, which shall further help in India’s development,” the ministry added.
DFC or its predecessor agencies have been active in India since 1974 and have provided investment support worth $5.8 billion, of which $2.9 billion is still outstanding.
Proposals worth $4 billion for providing investment support in India are being considered by DFC. The agency has provided investment support in sectors related to development, such as manufacturing of Covid-19 vaccines, healthcare financing, renewable energy, financing of SMEs, financial inclusion and infrastructure.
The Better Utilization of Investments Leading to Development (BUILD) Act of 2018 reformed and strengthened American development finance capabilities into the DFC to help address development challenges and foreign policy priorities of the US.
In India, the DFC has been involved in funding the expansion of vaccine manufacturing capabilities under the vaccine partnership of the Quadrilateral Security Dialogue or Quad.