Why in News:

• Marking progress on the delayed implementation of the $500 million defence Line of Credit (LoC) extended by India to Bangladesh, Bangladesh has recently shared a wish list of military platforms and systems that its armed forces would like to procure from India

What is Line of Credit?

• The Line of Credit is not a grant but a ‘soft loan’ provided on concessional interest rates to developing countries, which has to be repaid by the borrowing government.
  • The LOCs also helps to promote exports of Indian goods and services, as 75% of the value of the contract must be sourced from India.
• The largest concessional credit given by India to a country has been to Bangladesh.

The need

• China has emerged as one of the top arms suppliers globally, and especially for countries in India’s neighbourhood.
• In a bid to counter this, India has of late significantly expanded its military diplomacy and assistance for capacity building and capability development for countries in the Indian Ocean Region.

References:

1. https://www.newindianexpress.com/nation/2022/mar/10/fourfold-rise-in-indias-lines-of-credit-for-neighbourssince-2014-data-2428402.html
2. https://www.thehindu.com/news/national/bangladesh-shares-wish-list-of-military-hardware-for-procurement-from-india/article65856825.ece
3. https://pib.gov.in/newsite/PrintRelease.aspx?relid=133835