Investment Incentive Agreement between the Government of India and the Government of United States of America

What is the News?

The Government of India and the Government of the United States of America have signed an Investment Incentive Agreement (IIA) in Tokyo, Japan.

What is the Investment Incentive Agreement (IIA)?

The Agreement is the legal requirement for DFC(Development Finance Agency of the USA), to continue providing investment support in India.

Note: This present IIA supersedes the Investment Incentive Agreement signed between the Government of India and the Government of the United States of America in the year 1997.

What is the need for the new IIA?

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 the USA.

Note: The DFC is a successor agency of the erstwhile Overseas Private Investment Corporation (OPIC) after the enactment of the recent legislation of the USA, the BUILD Act 2018.

What are the benefits associated with IIA?

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, and feasibility studies for potential projects and grants.

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.

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

Hence, the signing of IIA would lead to enhanced Investment support provided by DFC in India, which shall further help in India’s development.

Source: The post is based on the article “Investment Incentive Agreement between the Government of India and the Government of United States of America” published in PIB on 23rd May 2022.