Line of Credit
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.
- 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.
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