Chinese banks have granted $2.5bn in credit lines to Bharti Airtel, the Indian telecoms group, in one of the biggest Beijing-backed financings for an Indian group to date.
It heads $22bn in business deals signed during Indian prime minister Narendra Modi’s visit to China.
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In meetings with President Xi Jinping and other Chinese leaders, Mr Modi sought to strengthen commercial ties between India and its more prosperous neighbour as well as ease tensions over their disputed 4,000km Himalayan border. China had already promised $20bn of infrastructure during Mr Xi’s visit to India last year.
“We are very keen to develop the sectors where China is strong,” Mr Modi told Indian and Chinese business executives in Shanghai. “We need your involvement. The scope and potential, the breadth and length of infrastructure and related developments is very huge in India.”
Bharti Airtel said it had agreed a $2bn credit line from China Development Bank — which it called the single largest bilateral commitment by CDB to any telecoms operator globally and the largest to a private Indian company — and a further $500m from Industrial and Commercial Bank of China. Loan maturities extend up to nine years.
“These financings further complement the strong collaboration with Chinese partners,” said Bharti Airtel, which announced a “strategic collaboration” with China Mobile in March. Bharti is already sourcing equipment from Chinese equipment makers Huawei and ZTE, putting the new lines of credit squarely within China’s existing practice of financing projects overseas that enable business for Chinese companies.
The deal is one of the first since CDB’s capital injection last month, with a mandate to finance projects under Mr Xi’s “one belt, one road” initiative to promote Chinese industry overseas.
Other big Indian groups that have benefited from Chinese bank credit include Essar Oil and the Reliance group of Anil Ambani, which secured a $1.2bn loan from three Chinese banks, including CDB, in 2012.
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Among other agreements signed during Mr Modi’s visit, India’s Adani Group and China’s Golden Concord Holdings said they would set up an integrated solar photovoltaic industrial park, while Welspun Energy of India signed a memorandum of understanding with China’s Trina Solar for the production of photovoltaic cells and panels.
Mr Modi’s government, elected a year ago, has announced ambitious plans to install 100 gigawatts of solar electricity capacity by 2022.
“India is ready for business,” Mr Modi said in China before heading to its northern neighbour Mongolia. “I strongly believe that this century belongs to Asia.”
In Mongolia on Sunday he announced a $1bn line of credit for the country, upgraded bilateral relations to a “strategic partnership” and called Mongolia “the new bright light of democracy in our world”.
Mongolia is an active democracy and has had several peaceful transfers of power between parties since the fall of the Soviet Union, which is unusual among soviet satellite states.
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Trade and other ties between India and China have been surprisingly thin since Silk Road traffic slowed 1,000 years ago but have quickened in recent years as India taps Chinese financing and engineering for its infrastructure needs.
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The two countries also signed a joint accord on climate change, reminiscent of the agreement signed between the US and China in November. India and China called for developing countries to fulfil pledges of financing and technology transfer. Neither China nor India has yet submitted its detailed commitments ahead of an international climate change meeting in Paris in December.
Prasanta Patnaik