Investment Incentive Agreement

IAS Current affairs - Investment Incentive Agreement

Investment Incentive Agreement


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



  • The Investment Incentive Agreement agreed between the governments of India and the United States of America in 1997 has been superseded by this IIA.
  • Since the earlier IIA was signed in 1997, significant developments have occurred, including the creation of a new agency called DFC, a development finance agency of the United States government, as a successor agency to the erstwhile Overseas Private Investment Corporation (OPIC), following the enactment of recent US legislation, the BUILD Act 2018.
  • To stay up with the DFC’s increased investment support programmes, such as loan, equity, investment guaranty, investment insurance or reinsurance, feasibility studies for possible projects, and awards, an IIA was signed.
  • The agreement is required by law for DFC to continue providing investment assistance in India.
  • DFC or its predecessor organisations have been active in India since 1974, providing $5.8 billion in investment support, with $2.9 billion remaining unpaid.
  • DFC is considering proposals totaling $4 billion for providing investment support in India.
  • DFC has supported development by investing in areas such as COVID-19 vaccine production, healthcare finance, renewable energy, SME financing, financial inclusion, and infrastructure.
  • The signing of the IIA is projected to result in more investment support from DFC in India, which will aid India’s development.


Way Forward:

  • India-U.S. bilateral relations have developed into a “global strategic partnership”, based on shared democratic values and increasing convergence of interests on bilateral, regional and global issues.
  • This agreement can play a further boost to leverage the partnership between the two countries.


Source: THE HINDU.

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