The agreement will provide enhanced US investment support in key sectors

India and the United States of America signed an Investment Incentive Agreement (IIA) during a meeting between both sides in Tokyo, Japan on Monday.

The signing of IIA would lead to enhanced investment support provided by the US International Development Finance Corporation thereby encouraging investment in key sectors, Ministry of External Affairs Spokesperson Arindam Bagchi tweeted.

The IIA was signed by India's Foreign Secretary Vinay Kwatra and the CEO of the United States International Development Finance Corporation Scott Nathan.

The Investment Incentive Agreement agreed between the governments of India and the United States of America in 1997 has been superseded by this IIA, the Ministry of External Affairs (MEA) said.

Since the previous IIA was signed in 1997, significant developments have occurred, including the formation 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.

The IIA was signed to keep up with the DFC's increased investment assistance programmes, such as loans, equity, investment guarantee, investment insurance or reinsurance, feasibility assessments for possible projects, and awards, the MEA said.

This agreement is a legal necessity for DFC to keep encouraging investment in India. DFC or its predecessor organisations have been engaged in India since 1974, providing $5.8 billion in investment support, with $2.9 billion remaining unpaid.

Now, DFC is considering proposals totalling $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.

According to the MEA, the signing of the IIA is projected to result in more investment assistance from DFC in India, which will aid India's growth.