India and Japan on March 26, signed agreements for loans and a grant worth a total of 232.86 billion yen ($2.11 billion) for crucial infrastructure projects, including Tokyo’s first-ever aid for a project in the Andaman and Nicobar Islands and a 119.9-billion yen loan for phase IV of the Delhi Metro.
The financial assistance included a grant of 4.01 billion yen for a project for the improvement of power supply in strategically-located Andaman and Nicobar Islands, according to the Japanese Embassy in New Delhi. It is being perceived as significant in terms of the commitment by India and Japan to work for a free and stable Indo-Pacific.
“This is the first ever official development assistance (ODA) project in the strategic islands of Andaman and Nicobar, apart from emergency humanitarian assistance. Due to its geopolitical location, Andaman and Nicobar Islands play a crucial role in our shared vision for a free, open and inclusive Indo-Pacific,” said an official of the Japanese embassy.
The funding will be used to procure 15MWh batteries and power system stabilizers to facilitate reliable electricity supply from a solar system in South Andaman, including Port Blair. The project will boost economic activities and contribute to India’s target of achieving 100% renewable energy in the Andaman and Nicobar islands, as well as Japan’s “green growth strategy”.
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Both India and Japan have been expanding cooperation in the Indo-Pacific region bilaterally as well as under the framework of the Quad grouping. Besides India and Japan, the Quad comprises the US and Australia.
The 119.9-billion yen loan for phase IV of the Delhi Metro is for the construction of three priority corridors – an extension of Line 7 (Mukundpur to Maujpur, 12.6 km), Line 8 (Janakpuri West to RK Ashram, 28.9 km), and a new corridor between Aerocity and Tughlakabad (23.6 km). Japan has supported the Delhi Metro since its beginning and has extended loans worth a total of 705.2 billion yen (about ₹47,000 crores) for the project since 1997.
Another loan of 52.36 billion yen will fund the construction of three new lines with a total length of 80 km during phase II of the Bengaluru Metro. Japan has supported the Bengaluru Metro since 2006. The project is expected to complete by 2029 following which the number of commuters using the Bengaluru Metro is expected to increase from 0.45 million in 2020 to four million when phase II begins operations.
Japan has so far extended loans of more than 1.3 trillion yen (about ₹86,000 crores) to develop the metro rail systems in Delhi, Bengaluru, Kolkata, Chennai, Mumbai, and Ahmedabad.
The loan of 11.32 billion yen for the Himachal Pradesh Crop Diversification Project (Phase 2) aims at promoting agricultural productivity and sustainable crop diversification to higher-value crops and thereby improving farmer’s income. Under this project, production infrastructure such as irrigation facilities and access farm roads will be developed and farmers sales will be promoted through various types of support, including the formation of Farmer Producer Organization (FPO).
A loan of 45.8 billion yen for phase II of the Rajasthan rural water supply project will see the construction of water treatment plants and related facilities including a vast distribution network of nearly 20,000 km in Jhunjhunu and Barmer districts in the state. These facilities will fulfill the water demands of nearly 1.7 million people in the two districts, and contribute to India’s flagship “Jal Jeevan Mission”.
The loans have an interest rate of 1.15% per annum, and a redemption period of 30 years, including a 10-year grace period.