ADB LOAN – Asian Development Bank (ADB) has approved $631 million (Rs.4165 crore) in loans and grants for infrastructure development along the Vizag-Chennai Industrial Corridor (VCIC) on 20th September, 2016.
ADB LOAN | Break-up of the loan amount
- $ 500 million two-tranche facility to build key infrastructure
- $ 125 million two-tranche loan to help with industrial policies and business promotion
- $ 5 million grant from the multi-donor Urban Climate Change Resilience Trust Fund that is managed by ADB to build climate resilient infrastructure, and
- $1 million technical assistance to help the Andhra Pradesh local Government to manage the corridor.
ADB LOAN | Background
- India and ADB have signed first tranche of loan USD 375 million pact for loans and grants to develop Visakhapatnam-Chennai Industrial Corridor.
- First tranche loan will have a 25-year term, including a grace period of 5 years, a 20 year straight line repayment method at an annual interest rate determined in accordance with ADB’s LIBOR-based lending facility.
ADB LOAN | About Vishakhapatnam-Chennai Industrial Corridor (VCIC)
- Visakhapatnam–Chennai Industrial Corridor (VCIC), also Vizag–Chennai Industrial Corridor, is a key part of the East Coast Economic Corridor (ECEC), India’s first coastal corridor.
- VCIC is aligned with the Golden Quadrilateral and is poised to play a critical role in driving India’s Act East Policy and Make in India campaign.
- The nearly 800-kilometer corridor links India with the Association of Southeast Asian Nations (ASEAN) and East Asian economies that form the bedrock of global manufacturing economy.
- The corridor traverses nine districts of the state of Andhra Pradesh. VCIC intends to complement the ongoing efforts of the Government of Andhra Pradesh (GoAP) to enhance industrial growth and create high quality jobs.
ADB LOAN | Significance of VCIC
While India’s trade with East and Southeast Asia has increased at a rapid pace in the past decade, the bulk of this trade is done through the ports on the country’s west coast. This is largely due to lack of efficient transport networks linking the production clusters in northern and central India to ports on the east coast, and insufficient container capacities at the ports to handle the volume of trade flowing to East and Southeast Asia.
- VCIC’s long coastline and strategically located ports allow development of multiple international gateways to connect India with global value chains (GVCs) in Southeast and East Asia.
- VCIC aligns with the national objectives of expanding the domestic market and supports India’s port-led industrialization strategy (Sagar Mala initiative).