Announcement of India Develops Electronics Industry on June 19, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. *Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 89/93 Contact: Roberta Lovatelli (202) 477-3917 Leandro V. Coronel (202) 477-3641 INDIA DEVELOPS ELECTRONICS INDUSTRY WASHINGTON, June 19, 1989 -- India will invest $450 million to continue progress in developing an internationally competitive electronics industry. Three World Bank loans totaling $210 million will partially finance the project. Through this project, India plans to promote the growth of the domestic electronics industry by upgrading the capability of Indian financial institutions to assist investment projects in the sector. The project also aims at expanding the capacity of technical institutions to develop skills needed by the sector. The country has the potential to develop its electronics industry based on its large pool of engineering and scientific manpower and its potentially large domestic markets. Gross production of electronics products grew at an annual average of 22 percent during 1980-87 and had a value of close to $4 billion in 1987. The project aims at upgrading the capability of the Industrial Credit and Investment Corporation of India and the Industrial Development Bank of India to identify, appraise and finance projects. Through these institutions the project will finance fixed assets and working capital in private and joint sector enterprises that can become competitive. The project also includes technical assistance to develop the computer-software industry and to improve the informational and analytical basis for investment decisions and policymaking. The project is expected to provide financing for about 30 enterprises and to provide technical assistance to improve efficiency of an additional 50 firms. The project's training component will result in an upgraded capability of some 30 institutions to produce 4,000 middle- and high-level technical and professional staff annually in the fields of electronics and computer software. The additional staff would facilitate the transfer of technology that is critical for electronics development. Investments under the project are expected to generate jobs for about 12,000 people. The Swiss Development Cooperation and the Japan Grant Facility are expected to provide cofinancing in the form of grants of $16.2 million and $2.7 million, respectively. The three World Bank loans are to the Government of India ($8 million), Industrial Development Bank of India ($101 million), and Industrial Credit and Investment Corporation of India Ltd. ($101 million). The World Bank loans are for 20 years including five years' grace period, with a variable interest rate, currently 7.65 percent, linked to the cost of the Bank's borrowings. They also carry an annual commitment charge of 0.75 percent on the undisbursed balances. NOTE: Money figures are expressed in U.S. dollar equivalents.