An Investment Incentive Agreement (IIA) has been signed between the government of India and the government of the United States of America at Tokyo, Japan. The IIA was signed on Monday by India Foreign Secretary Vinay Kwatra and US International Development Finance Corporation (DFC) CEO Scott Nathan.
The IIA agreement will replace the Investment Incentive Agreement signed between the government of India and the government of the United States of America in the year 1997. Since the signing of the earlier IIA in 1997, numerous notable developments have taken place. These include the creation of a new agency called DFC, a development finance agency of the US government.
DFC invests in development projects primarily in lower- and middle-income countries. It is a successor agency of the former Overseas Private Investment Corporation (OPIC) after the enactment of a recent legislation of USA, the BUILD Act 2018.
What is the significance of IIA?
The IIA has been signed to keep pace with the additional investment support programmes offered by the DFC, such as debt, equity investment, investment guarantee, investment insurance or reinsurance, feasibility studies for potential projects and grants.
The latest agreement is the legal requirement for DFC to continue providing investment support in India. It is worth mentioning here that DFC or their predecessor agencies, active in India since 1974, have so far provided investment support worth $5.8 billion of which $2.9 billion is still outstanding.
DFC has offered investment support in India in sectors that matter for development like Covid-19 vaccine manufacturing, healthcare financing, renewable energy, SME financing, financial inclusion, infrastructure etc.
Further, it is expected that signing of IIA agreement would lead to enhanced investment support provided by DFC in India, which in turn would lead to India’s development.
