New Delhi: In key initiatives that are set to bolster ties between New Delhi and Kathmandu, India on Friday unveiled a $250 million line of credit and sealed a bilateral investment protection treaty that would boost economic ties between the two neighbours.
Prime Minister Manmohan Singh held wide-ranging discussions with his Nepalese counterpart Baburam Bhattarai on a host of bilateral issues, including expanding economic and security ties between the two countries.
Bhattarai updated Manmohan Singh about recent political developments and sought his support in reinvigorating the peace process in his country that continues to be riven with political dissensions, said well-placed sources. He also briefed New Delhi about progress in the integration and rehabilitation of the Maoist cadre in the national army.
Manmohan Singh assured the Maoist leader that New Delhi will do all it can to spur the peace process in the Himalayan country and pushed for building political consensus to quicken the process of constitution making, said sources.
In an important step that underlines New Delhi's keen desire to build relations with the Maoist dispensation in Kathmandu, marking a return to "business as usual" in bilateral ties, India offered a $250 million line of credit that would be used for a swathe of development projects in that country.
The agreement on soft loans was signed by T.C.A. Rangathan, executive director of EXIM Bank and Lal Shanker Ghimire, joint secretary in Nepal's Ministry of Finance.
The credit line will be used to finance a range of infrastructure projects, including highways, airports, bridges, irrigation, roads, railways and hydropower projects. The soft loan will carry a concessional rate of interest of 1.75 percent per annum, with repayment period of 20 years, inclusive of 5 years moratorium.
In a breakthrough, Kathmandu agreed to address the security worries of Indian investors and went ahead with the signing of a long-overdue Bilateral Investment Promotion Agreement.
The agreement was signed by Finance Minister Pranab Mukherjee and Nepal's Industry Minister Anil Kumar Jha.
Significantly, the treaty accommodates the long-standing Indian demand and entails granting compensation to the investors whose investments suffer losses owing to war, armed conflict or a state of national emergency. A memorandum of understanding between the two governments regarding Indian grant assistance for Goitre Control Programme in Nepal was also inked.
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