India, US Sign Key Investment Incentive Agreement; Deal To Supersede IIA Inked In 1997

India and the United States on Monday (23 May) signed an Investment Incentive Agreement (IIA) at Tokyo, Japan.

The IIA was signed by Foreign Secretary Vinay Kwatra, and Scott Nathan, Chief Executive Officer, US International Development Finance Corporation (DFC).

This IIA supersedes the Investment Incentive Agreement signed between the two countries in the year 1997, the Commerce Ministry said in a release on Monday.

According to the ministry, significant developments have taken place since the signing of the earlier IIA in 1997 including the creation of a new agency called DFC, a development finance agency of the Government of USA, as a successor agency of the erstwhile Overseas Private Investment Corporation (OPIC) after the enactment of a recent legislation of USA, the BUILD Act 2018.

IIA has been signed to keep pace with the additional investment support programmes, offered by the DFC, such as debt, equity investment, investment guaranty, investment insurance or reinsurance, feasibility studies for potential projects and grants, the ministry said.

The agreement is the legal requirement for DFC to continue providing investment support in India.

DFC or their predecessor agencies are active in India since 1974 and have so far provided investment support worth $5.8 billion of which $2.9 billion is still outstanding, the ministry said.

Proposals worth $4 billion are under consideration by DFC for providing investment support in India, it added.

DFC has provided investment support in sectors that matter for development such as COVID-19 vaccine manufacturing, healthcare financing, renewable energy, SME financing, financial inclusion, infrastructure etc.

The ministry expects that signing of IIA would lead to enhanced Investment support provided by DFC in India, which will further help in the country's development.