Export-Import Bank of India (EXIM Bank) has, at the behest of the Government of India, extended a Line of Credit (LOC) of $20 million to the Government of the Republic of Côte d’Ivoire, for financing Mahatma Gandhi IT and Biotechnology Park. Yeduvendra Mathur, CMD, Exim Bank, reveals more to Usha Sharma about the investments
What was the reason behind Exim Bank extending a LOC to Government of the Republic of Côte d’Ivoire?
Exim Bank extends LOCs on its own, and also at the behest and with the support of Government of India (GoI) under the Indian Development and Economic Assistance Scheme (IDEAS) with an objective to share India’s development experience through:
a) capacity building and skills transfer;
b) trade; and
c) infrastructure development towards socio-economic benefits in developing partner countries.
India is working closely with the Government of the Republic of Côte d’Ivoire to make Mahatma Gandhi IT and Biotechnology Park (MGIB) a success. Early in the project, Côte d’Ivoire benefited from Indian expertise to create this free zone dedicated to Information and Communication Technology (ICT) and biotechnology. The park is located in the town of Grand-Bassam, a historic seaside town, on the outskirts of the commercial capital of Abidjan.
Government of India (GoI) is also assisting in capacity building in the IT sector by offering scholarships under its Indian Technical and Economic Cooperation (ITEC) Programme.
At the behest of GoI, Exim Bank extended LOC of $25.50 million to the Government of Côte d’Ivoire for financing (i) Mahatma Gandhi IT and Biotechnology Park (MGIB), (ii) Fisheries Processing Plant and (iii) Coconut fibre processing plant. Out of $25.50 million, $20.00 million has been allocated for financing MGIB Project in Côte d’Ivoire under the TEAM-9 initiative of GoI.
A LOC is a financing mechanism through which Exim Bank extends support for export of projects, equipment, goods and services from India. Under $20.00 million, two contracts were awarded to Indian companies viz. Shapoorji Paloonji and United Telecoms India.
Construction of the Free Trade Zone (FTZ) by SPCL: Scope of work consists of architectural concept and standards for the buildings in the park, design, architectural and technical study, construction of the building hosting IT enterprises, and construction of 2.7 km compound wall around the Village of Information Technology and Biotechnology (VITIB)’s campus.
Supplies by UTIL: Supply and installation of computer assembly plant, DNA lab, satellite earth station, audio-video studio, and telecom lab, generator, and data storage network.
How will it accelerate the growth of Indian biotech and IT companies and what benefit will Indian companies have?
MGIB was born with the desire of Côte d’Ivoire to create a free zone dedicated to ICT and Biotechnology. Côte d’Ivoire government aspires to build MGIB as one of the most modern IT Park in West Africa. It will be the technological showcase of West Africa. Being a member of Economic Community of West African States (ECOWAS), Indian companies setting up in the park will have access of ECOWAS market. ECOWAS is a 15-member regional group with a mandate to promote economic integration in all fields of activity of the constituting countries (Benin, Burkina Faso, Cape Verde, Côte d’ Ivoire, The Gambia, Ghana, Guinea, Guinea Bissau, Liberia, Mali, Niger, Nigeria, Sierra Leone, Senegal and Togo).
The Common External Tariff is one of the instruments of harmonising ECOWAS Member States and strengthening its common market. ECOWAS Treaty defines the aims of the community as promoting “co-operation and integration, leading to the establishment of an economic union in West Africa. Indian companies are encouraged to form joint ventures (JVs) with Ivorian companies. Exim Bank will support Indian companies to develop strategic partnership under its Overseas Investment Finance (OIF) Programme.
Tell us more about the bank’s overseas investment finance programme. Will it help Indian and West African companies to forge a strategic partnership?
Exim Bank encourages Indian companies to invest abroad for setting up of manufacturing units and for acquiring overseas companies to get access to the foreign market, technology, raw material, brand, IPR etc. For financing such overseas investments, Exim Bank provides:
a) Term loans to Indian companies of upto 80 per cent of their equity investment in overseas joint venture (JV)/ wholly-owned subsidiary (WOS).
b) Term loans to Indian companies towards upto 80 per cent of loan extended by them to the overseas JV/ WOS.
c) Term loans to overseas JV/ WOS towards part financing
(i) Capital expenditure towards acquisition of assets;
(ii) Working capital;
(iii) Equity investment in another company;
(iv) Acquisition of brands/ patents/ rights/ other IPR;
(v) Acquisition of another company;
(vi) Any other activity that would otherwise be eligible for finance from Exim Bank had it been an Indian entity.
d) Guarantee facility to the overseas JV/ WOS for raising term loan/ working capital.
How many Indian biotech and pharma companies have their presence at MGIB Project in Côte d’Ivoire? What regulatory requirements are required to set up a plant at the park?
As on date, two pharma companies (Pharmanova Ghana, Subsidiary of Pharmanova, Ghana; and Strides Pharma, subsidiary of New Life Pharmaceutical), are in the process of setting up their formulation plant in the park. VITIB is responsible for management, operations and promotion of the FTZ. VITIB was founded by Ivorian and international partners. VITIB is developing, operating, managing and promoting the FTZ. VITIB will also provide professional and support services for companies in the FTZ. For registration in Côte d’Ivoire, Centre of Promotion of Investments in Côte d’Ivoire (CEPICI) provides ‘one-stop-shop’ mechanism and legal framework to maximise administrative efficiency (license, Visa, work permit, import, export).
Long-term visa and work permit for foreign workers and their families are available for companies setting their shops in MGIB. There is no limitation on local and foreign investments. Indian companies are required to adhere to the guidelines pertaining to overseas direct investment, notified by the Reserve Bank of India vide Notification No. FEMA 120/RB-2004 dated July 7, 2004, as amended from time to time.
By when will MGIB Project likely to be completed? Is it going to be a FTZ for IT and biotech. What subsidies will biotech companies get?
Currently in the second phase, 180 hectares are being developed. In the first phase of 60 hectares, VITIB Academy complex is situated comprising VITIB’s office and building for data storage, biotechnology lab, etc. The first phase was formally inaugurated during the visit of Praneet Kaur, Minister of State for External Affairs, the Government of India on January 24, 2014. The project, when completed, will be a dedicated FTZ for IT and Biotechnology.
Companies who want to set up shop at the proposed FTZ can avail the following provisions:
a) Zero per cent of customs duties on import and export;
b) Zero per cent income tax for the first five years of operations (for tenants and developers of the park);
c) One per cent income tax on turnover starting year six with the possibility of tax reduction up to 50 per cent;
d) Zero per cent of VAT on electricity, water and oil products consumption;
e) Freedom for the transfer of funds generated by salaries and dividends.
Côte d’Ivoire is a leader of the economic and monetary union of West Africa, and is the first financial centre of West Africa with a regional stock exchange and second largest seaport in Africa. What business opportunities are available at Côte d’Ivoire?
Côte d’Ivoire’s economic performance has been impressive over the past four years with a robust GDP growth. Posting an economic growth rate of almost nine per cent in 2015, Cote d’Ivoire’s growth rate is among the highest in Africa. Economic activity maintained its dynamic pace across all sectors benefiting from a robust aggregate demand and a surge in both private and public investments.
According to Côte d’Ivoire Government’s National Development Plan (NDP) for 2016-2020, Côte d’Ivoire offers investment opportunities amounting to $50 billion, which consists of $18.8 billion for the public sector, and $31.2 billion for the private sector. Côte d’Ivoire is regarded a prime destination for investment in Africa, and key sectors for investments are agriculture, agribusiness, mining, hydrocarbon, and industrial sector.