March 31, 2017
New Delhi, March 31, 2017: Japan International Cooperation Agency (JICA) signed an agreement with the Government of India to provide Official Development Assistance (ODA) Loan of 22,145 million Japanese Yen (approximately INR 1,300 crores) for "Tamil Nadu Investment Promotion Program (Phase 2)" (TNIPP2). This is the additional loan for Phase I, which was signed in 2013 to provide up to 13,000 million Japanese Yen (approximately INR 780 crore) soft loan. By adding this loan, the cumulative loan amount for this program amounts to 43,000 million Japanese Yen (approximately INR 2,670 crore) currently. The ODA loan's conditions are very concessional, i.e. 1.4% interest rate and 30 years of repayment period (including 10 years of grace period). The assisted program aims at developing the investment climate through strengthening the policy framework, and facilitating development of trunk and industry related infrastructure in a timely manner, thereby contributing to more foreign direct investments to Tamil Nadu state. The Program also aims to support the medium-term policy program of the Government of Tamil Nadu (GoTN) in accordance with its strategic initiatives mentioned in the Tamil Nadu Vision 2023.
The agreement was signed between Mr. Takema SAKAMOTO, Chief Representative, JICA India Office and Mr. S. Selvakumar, Joint Secretary, Department of Economic Affairs, the Ministry of Finance, Government of India in New Delhi.
Speaking on the occasion, Mr. Takema Sakamoto, Chief Representative, JICA India Office said, "TNIPP2 is expected to further accelerate a growing trend of investment by foreign private companies into Tamil Nadu state after the great success of TNIPP Phase1. The Program is also contributing to progress of the "Chennai-Bengaluru Industrial Corridor" led by the Governments of both Japan and India."
The Program comprises of "Acceleration of Infrastructure Development" through the Tamil Nadu Infrastructure Fund (TNIF) and facilitation of small infrastructure project, "Skill Development for Employment", "Strengthening of Guidance Bureau" and "Strengthening of Single Window for Micro Small and Medium Enterprise (MSME)." TNIPP2 targets project development in a seamless, efficient and transparent manner; shortlisted and prioritized projects taking into consideration the requests from existing and potential foreign investors; improve the employment rate of fresh graduates and enhance quality of training institutions; upgrade single window clearance system by promoting focal-department collaboration and will provide investment guidebooks and conducting workshops for MSMEs.
Tamil Nadu is one of the most industrialized states in India. In March 2012, the Government of Tamil Nadu has launched the Tamil Nadu Vision 2023 for which acceleration of investment by foreign private sector in Tamil Nadu is essential. In order to promote foreign investment, and to realize long term sustainability of industrial development, not only development of high quality infrastructure, but also steady implementation of an industrial policy that attracts a larger number of foreign investments is essential.
However, neither state nor municipal budgets can fully shoulder the necessary investments for infrastructure development. As a consequence, majority of large-scale infrastructure has to be financed in cooperation with the private sector, but due to the complicated administrative procedures, the private or public-private partnership financing faces a series of challenges. There is still vast room to further promote investment-friendly policies and infrastructure development directly related to private investment projects, in order to materialize the Tamil Nadu Vision 2023 and to attract private investors.
To ensure and enhance private sector participation, the GoTN requires to continue to remove existing bottlenecks for foreign investments by its review and renewal of the entire policy framework, such as sophistication and upgrading of the Single Window System, creation of industry-oriented, skilled workers, trunk infrastructure development, etc. In this context, The Program will address the remaining and newly arising issues towards a better investment climate in the state of Tamil Nadu.
L-R – Mr. N. Venkatesh, IAS, Deputy Secretary(Budget), Finance Department, Government of Tamil Nadu, Mr. Takema Sakamoto, Chief Representative, JICA India Office and Mr. S. Selvakumar, Joint Secretary , Department of Economic Affairs (DEA) at the Loan Agreement Signing of Tamil Nadu Investment Promotion Program (Phase 2)
Established, by a specific law, as an independent administrative institution under the Government of Japan, the Japan International Cooperation Agency (JICA) aims to contribute to the promotion of international cooperation, as a sole Japanese governmental agency in charge of ODA implementation. JICA is the world's largest bilateral donor agency. JICA works as a bridge between Japan and emerging countries, and provides assistance in forms of loan, grant and technical cooperation so that the emerging countries can strengthen their capabilities.