New Delhi, Aug 1 (IANS) The Cabinet on Wednesday extended the Concessional Financing Scheme (CFS) to support Indian entities bidding for strategically important infrastructure projects abroad for five years till 2023.
"Since the objectives of the scheme continue to be relevant, it is proposed to extend the scheme for another five years from 2018 to 2023," an official statement said after a cabinet meeting. The scheme has been running since 2015-16.
Under the scheme, the Indian government provides counter guarantee and interest equalisation of 2 per cent to EXIM Bank to offer concessional finance. It is given to any foreign government owned or controlled entity, if an Indian entity gets the contract for the execution of a project.
The financial implications towards payment of "Interest Equalisation Support" for the existing projects will be about $96 million or Rs 625 crore in the five-year period.
"Under the scheme, Ministry of External Affairs (MEA) selects the specific projects keeping in view strategic interest of India and sends the same to Department of Economic Affairs (DEA)," the statement said.
Prior to the scheme launch, Indian entities were not able to bid for large projects abroad since the cost of financing was very high for them and bidders from other countries like China, Japan, Europe and US were able to provide credit at lower interest rate and longer tenures.
"By having projects of strategic interest to India executed by Indian entities, the CFS enables India to generate substantial backward linkage induced jobs, demand for material and machinery in India and also a lot of goodwill for India," it said.
The strategic importance of a project to deserve financing under the scheme is decided on a case to case basis by a committee chaired by DEA Secretary. It comprises of members from other departments and ministries of finance, commerce, external affairs and home affairs including the Deputy National Security Adviser.