Announcement of India to Launch Major Project in Industry on October 31, 1985

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. INTERNATIONAL MONETARY FUND JOJ:H LIBRARi' BANK NEWS RELEASE NO. 86/31 Contact: P.B Sison October 31, 1985 (202) 477-3573 INDIA TO LAUNCH MAJOR PROJECT IN INDUSTRY India will .invest some $1 billion over the next three years to strengthen institutional and financial support for firms investing to modernize and expand the country's engineering subsector. The World Bank will support the project with a loan totalling $250 million. The loan will support the government's efforts to increase the competitiveness and exports of India's manufactured goods, particularly engineering products. Of the loan total, the government will use $70 million to finance the foreign currency portion of credits provided by commercial banks to engineering ancillary firms. A total of $10 million will be allotted to a Productivity Fund to help pay for the cost of consultants, technicians and materials. Another $10 million will be set aside under the Export Marketing Fund to support export marketing programs undertaken by engineering firms. The remaining $160 million will be used by the Investment Credit and Investment Corporation of India (ICICI) to finance the foreign exchange portion of loans for smaller export-oriented projects. About $100 million will be allocated to engineering subprojects. The project is expected to improve the competitiveness and quality of exports and, subsequently, to increase their volume. It will also receive funding from ICICI ($760 million), commercial banks ($200 million), the Productivity Fund ($20 million), and the Export Marketing Fund ($20 million). The World Bank loan is for 20 years, including five years of grace, with a variable interest rate, currently 8.82 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.