Bangladesh, India set to sign $4.5 billion LoC deal during Jaitley visit

DHAKA: Union finance minister Arun Jaitley arrived here on Tuesday ahead of India and Bangladesh signing the third line of credit (LoC) agreement tomorrow involving $4.5 billion to be spent for its infrastructure and social sector development.

"His visit will be marked by the signing of the deal on the $4.5 billion line of credit which was announced during Prime Minister Sheikh Hasina's 2017 New Delhi visit," a Bangladesh finance ministry spokesman told reporters.

He said two agreements for the implementation of the third LoC and the 'Joint Interpretative Notes on the Agreement between India and Bangladesh for the Promotion and Protection of Investments' would also be signed in the presence of Jaitley and his Bangladesh counterpart A M A Muhith.

"The two countries are also expected to enter into another deal on investment promotion and protection during the visit," the spokesman said.

A special aircraft carrying Jaitley landed at the Bangladesh Air Force Base this afternoon where Muhith received his counterpart who is accompanied by a group of business leaders and senior officials on the three-day visit.

Officials earlier said Bangladesh would have to purchase 65 to 75 per cent of the services, goods or works from the Indian market with the money to be provided under the third LoC following the precedence of the previous two nearly identical agreements.

India offered Bangladesh the third LoC through signing a Memorandum of Understanding (MoU) in April in New Delhi in Hasina's presence while officials said several government agencies already undertook 17 development projects to be implemented with the upcoming $4.5 billion loan.

Officials, however, said some projects under the first and second LoCs were faced with difficulties in the way of their implementation due to limited tendering system within the Indian market.

They said some projects under the first LoC of $862 million faced delay in implementation while the physical works of the 14 projects under the second LoC of $2 billion were yet to start.

The two countries signed the first LoC in August 2010 while the second one was inked in March, 2016.

According to the tour schedule, Jaitley would call on the Bangladesh premier and inaugurate along with his counterpart a new scheme for cashless transactions in visa services, run by the State Bank of India on behalf of the Indian High Commission here.