Japan to give largest yen loan for Indian railway project+

TOKYO, Oct. 22 Kyodo - Japan will provide its largest-ever yen loan package for a single overseas project, worth about 450 billion yen, to India to help build a freight rail connection between New Delhi and Mumbai, Japanese officials said Wednesday.

The provision of the funds was agreed during talks between Japanese Prime
Minister Taro Aso and his Indian counterpart Manmohan Singh in Tokyo, the two
leaders said.
The amount of the soft loan will be larger than its record to date of about 260
billion yen, extended in the past years to India for the development of a
subway system in New Delhi.
The latest loan will be used to finance part of India's so-called dedicated
freight corridor project between its capital and Mumbai, covering an overall
distance of about 1,500 kilometers. The total cost of building the railway link
is so far estimated at 860 billion yen, according to the officials.
Japan has been actively assisting India in improving its infrastructure in
recent years in part to make it easier for Japanese companies to tap into the
fast-growing market.
India, the third-largest economy in Asia after Japan and China, has been the
No. 1 recipient of low-interest yen loans for five consecutive years through
fiscal 2007.
The loan is ''the newest symbol of the two countries' cooperation,'' Aso said
at a joint news conference with Singh.
To deepen economic ties, Japan and India believe that more active involvement
of the private sector is essential.
Japan and India have been negotiating a bilateral trade agreement since January
2007 and have shared the view since then that the two countries would aim to
complete the talks in approximately two years.
The two countries had initially hoped to strike a basic deal on terms for
concluding the trade accord during Singh's visit.
But Aso and Singh stopped short of unveiling an outline of their economic
partnership agreement and instead agreed that the countries will work toward an
early conclusion of their negotiations.
Singh told reporters that India is looking forward to having ''a high-quality,
mutually beneficial and comprehensive'' free trade accord with Japan and said,
if realized, ''this will transform the scale and the magnitude of our economic
partnership.''
Areas in which Japan and India have not been able to narrow differences include
defining the nationality of goods traded between the two countries, or ''rules
of origin,'' and the details of mutual recognition arrangements for generic
drugs and other items and services, sources involved in the negotiations said.
The sources said substantive progress has already been made on issues related
to the level of tariff cuts, but senior officials are still finding it
difficult to find common ground on the specifics of trade rules.
Although the value of trade between Japan and India has been rising since the
early 2000s, the total amount of $10 billion in fiscal 2007, up about 20
percent from the previous year, is still relatively small compared with the
figures for their key export destinations and given the economic power of the
two countries.
Japan and India have set a target of expanding their trade value to $20 billion
by 2010.
In addition to bilateral issues, the leaders said they agreed on the need to
work closely to address the unfolding financial turmoil.
Singh told reporters that Japan and India can play a new role in countering a
global economic slowdown, although he did not elaborate on what precisely the
two Asian economic powers can do to deal with the global financial crisis.
Aso and Singh also reaffirmed their will to work together for an early and
successful conclusion of the World Trade Organization's Doha Round of trade
liberalization talks with ''a balanced and comprehensive outcome,'' according
to the two countries' joint statement.