Investment Incentive Agreement
- Posted By
10Pointer
- Categories
World Affairs
- Published
25th May, 2022
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Context
The Government of India and the Government of the United States of America have signed an Investment Incentive Agreement (IIA) in Tokyo, Japan.
What is an Investment Incentive Agreement (IIA)?
- This present IIA supersedes the Investment Incentive Agreement signed between the Government of India and the Government of the United States of America in the year 1997.
- The Agreement is the legal requirement for DFC (Development Finance Corporation of the USA), to continue providing investment support in India.
About DFC (Development Finance Corporation)
- There have been significant developments since the earlier IIA was signed in 1997, such as the founding of a new organization called Development Finance Corporation (DFC).
- DFC as a successor agency of the erstwhile Overseas Private Investment Corporation (OPIC)after the enactment of a recent legislation of the USA, the BUILD Act 2018.
Status of DFC in India
- DFC or their predecessor agencies have been active in India since 1974 and have so far provided investment support worth USD 5.8 billion of which USD 2.9 billion is still outstanding.
- Proposals worth USD 4 billion are under consideration by DFC for providing investment support in India.
- DFC has provided investment support in sectors that matter for development such as Covid-19 vaccine manufacturing, healthcare financing, renewable energy, Small and Medium Enterprises (SME) financing, financial inclusion, infrastructure etc.
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Purpose of IIAs:
- 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.
Significance of IIA
- 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 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.
