The Union Cabinet chaired by the Prime Minister Narendra Modi has approved
the proposed Memorandum of Understanding (MoU) between Export-Import Bank of
India (EXIM Bank) and Export-Import Bank of Korea (KEXIM) for export credit of
USD 9 billion for infrastructural development in India and for the supply of
goods and services as part of projects in third countries.
The MoU is proposed to be signed between the two banks during the forthcoming
visit of the Finance Minister Shri Arun Jaitley, to Seoul, Korea during June
14-15 for the Annual Financial Bilateral Dialogue. The decision is expected to
promote the country’s international exports, and deepen political and financial
ties between India and Korea.
The export credit will be utilized through lending by EXIM Bank for
promoting projects for priority sectors, including smart cities, railways,
power generation and transmission etc., in India and for the supply of goods
and services from India and Korea as part of projects in third countries.
Under the implementation strategy, the parties to the MoU will hold mutual
consultations to structure the financial assistance, review the existing
arrangements and related procedures. EXIM Bank will identify viable projects in
For projects in third countries, both parties will jointly identify viable
projects. It is understood from EXIM Bank that the USD 9 billion would be
extended by KEXIM by way of Investment Credit (typically export credit facility
to finance projects with a certain level of Korean import content and interest
rates as per OECD export credit guidelines). This amount may also be utilized
by KEXIM as the financier without the participation of EXIM Bank subject to
satisfaction of the purpose.
The supply of goods and services from India and Korea as part of projects
in third countries will be an additional avenue which this MoU will enable. It
will help in exchanging mutual experience, sharing information on financing
export and import operations, project assessment and knowledge generated in
respective fields of activities.
The Joint Statement issued in 2015
during the visit of the Prime Minister to the Republic of Korea stated that
Korea intends to offer USD 10 billion of infrastructural development in India.
The package was subsequently prepared to comprise of USD 1 billion from the
South Korean Economic Development Cooperation Fund (EDCF) as government to
government funding and USD 9 billion as export credit from KEXIM. The credit of
USD 9 billion from KEDIM is to be through a formal MoU to be signed between
KEXIM and EXIM Bank.