Japan signs biggest loan deal with India

October 22, 2008
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, TOKYO, October 22 – Japan on Wednesday signed its biggest ever loan deal for an overseas project to help India build a major railway between New Delhi and Mumbai.

Indian Prime Minister Manmohan Singh and his Japanese counterpart Taro Aso signed the deal at a summit in Tokyo. Japan will initially provide some 450 billion yen (4.5 billion dollars) in low-interest loans to India.

India will use the money to build a 1,468-kilometre (912-mile) freight railway between its political and economic capitals, hoping to improve its creaky infrastructure blamed for holding back the fast-growing economy.

The joint statement said that the so-called Western Corridor, which will also include economic projects around the railway, would be "the new flagship project of India-Japan cooperation."

The first part of the loan will go to fund engineering work for the project, which is slated for completion in 2015.

The loan is the largest ever extended by Japan for a single project overseas, topping the 260 billion yen it provided to India to build the New Delhi metro.

Aso and Singh "recognised that there is still immense untapped potential for the expansion of bilateral relations," the joint statement said.

Aso, who took office last month, has long advocated building relations with fellow democracy India to offset frequent tension in Japan\’s relationship with China.

The two leaders also said they would step up security cooperation including in the "war on terror," peacekeeping operations, disaster management and non-proliferation of weapons of mass destruction.

They called for a "strategic dialogue," including at the level of foreign ministers, to see how to boost military cooperation.

Japan held joint naval drills with India and the United States last year in the Pacific Ocean. Japan has been seeking a larger security profile despite its post-World War II constitution, which forbids it from ever again using force.

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