IL&FS bags $1-billion funding from Industrial & Commercial Bank of China
Mumbai: Infrastructure Leasing & Financial Services (IL& FS) Group has raised $1 billion of financial support from Industrial and Commercial Bank of China, signifying increased collaboration between the two nations. The financial support has come amid Prime Minister Narendra Modi's visit to China. Funds raised will be used toward infrastructure-related financing in India.
In another agreement, IL&FS Energy Development Co., asubsidiary of IL&FS, will develop, implement and operate a 3,960 Mw coal-based coastal power project in Kutch, Gujarat, with China Huaneng Group. The thermal power project is part of a special economic zone (SEZ).
"It provides a clear signal to the international community of India's growing attraction as an investment destination," said IL& FS managing director Ramesh Bawa. "This was a momentous occasion for IL&FS. The spirit of cooperation between the countries has meant that a defined development path can be put in place for the strategic objective of supporting infrastructure development."
India has signed trade and economic cooperation deals worth $22 billion with China as part of the Prime Minister's visit. A large part of this relates to Chinese banks financing Indian firms and deals in telecom, steel, solar energy and film sectors.
IL&FS Infra Asset Management, the mutual fund arm, is in the process of raising a $5 billion infrastructure debt fund. Five state-owned general insurance companies had committed close to Rs 2,000 crore to the fund last year. The funds raised will be used to purchase loans that banks have given to infrastructure projects such as power plants, roads and airports.
In the budget, the government stretched fiscal deficit target by a year to give much-needed push to infrastructure by increasing investment to Rs 70,000 crore, with the focus on railways and roads for the next financial year.
In its first year in office, the Modi government has introduced several initiatives on urbanization, financial inclusion, improving the ease of doing business, the Make in India manufacturing push and infrastructure funding.
"Implementation of these key policies will be important to ensure that the cyclical rebound in growth is backed by structural improvements," said Radhika Rao, an economist with DBS.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.