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Investment Incentive Agreement

 

Investment Incentive Agreement: Relevance

  • GS 2: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

 

Investment Incentive Agreement: Context

  • Recently, US has signed an Investment Incentive Agreement (IIA) with India to continue providing investment support in India.

निवेश प्रोत्साहन समझौता

Investment Incentive Agreement: Key points

  • This 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.
  • 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 Government of USA.
  • 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, feasibility studies for potential projects and grants.

 

Investment Incentive Agreement_40.1

 

What is DSA?

  • DSA is a successor agency of the erstwhile Overseas Private Investment Corporation (OPIC) after the enactment of a recent legislation of USA, the BUILD Act 2018.
  • The Agreement is the legal requirement for DFC, to continue providing investment support in India.
  • 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.

 

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