India becomes 69th shareholder of European development bank
India has formally become the 69th shareholder of the European Bank for Reconstruction and Development (EBRD), paving the way for more joint investment with Indian companies across the bank's regions of operation.
India on July 11, 2018 formally became the 69th shareholder of the European Bank for Reconstruction and Development (EBRD), paving the way for more joint investment with Indian companies across the bank's regions of operation.
India was selected as a member after all the existing EBRD shareholders, who also form its board of governors, voted unanimously in favour of the country's application in March 2018. The membership process was fully completed this week.
• The Indian government had applied for EBRD membership in December 2017.
• Though now, India has become a shareholder of the EBRD, it will not be a recipient of the bank’s financing.
• In the lead up to the membership, the EBRD held its inaugural business forum in Mumbai in June 2018.
• The conference, which was co-hosted with the Federation of Indian Chambers of Commerce and Industry (FICCI) and with the support of the Export-Import (EXIM) Bank of India, was held under the banner of ‘Mobilising private sector finance in the EBRD region and how Indian companies can benefit’.
• India’s acceptance as a member in the European Bank for Reconstruction and Development is expected to open up further prospects of joint investment in markets including Central Asia, Egypt and Jordan.
• It would enhance India's international profile and promote its economic interests and give it access to EBRD's Countries of Operation and sector knowledge, boosting investment opportunities.
• It would also increase the scope of cooperation between India and EBRD through co-financing opportunities in manufacturing, services, information technology and energy.
• Since EBRD's core operations pertain to private sector development in its countries of operation, the membership will help India leverage the technical assistance and sectoral knowledge of the bank for the benefit of the development of the private sector. It would also contribute to an improved investment climate in the country.
• India’s membership of EBRD would also enhance the competitive strength of the Indian firms and provide an enhanced access to international markets in terms of business opportunities, procurement activities and consultancy assignments.
• Increased economic activities could lead to the creation of more employment opportunities.
EBRD and India
• The European Bank for Reconstruction and Development has already cooperated with Indian enterprises on several joint projects worth almost €1 billion, including investments with Indian companies such as Tata, SREI, Jindal and Mahindra and Mahindra.
• The bank is also working closely with leading Indian organisations, such as FICCI, the Confederation of Indian Industry (CII), the Associated Chambers of Commerce & Industry of India (ASSOCHAM) and the International Solar Alliance (ISA).
• The issue relating to acquiring the membership of the bank had been under consideration of the Indian Government.
• With the country's impressive economic growth over the years and enhanced international political profile, it was considered appropriate that India should expand its presence on the global developmental landscape beyond its association with the Multi-lateral Development Banks (MDBs) such as the World Bank, Asian Development Bank and African Development Bank.
• The European Bank for Reconstruction and Development (EBRD) is an international financial institution, which was founded in 1991.
• As a multilateral developmental investment bank, the EBRD uses investment as a tool to build market economies.
• Headquartered in London, the EBRD is owned by 65 countries and two EU institutions. Despite its public sector shareholders, it invests in private enterprises, together with commercial partners.
• EBRD has members from all over the world including North America, Africa, Asia and Australia, with the biggest shareholder being the United States, but only lends regionally in its countries of operations.
• Initially focused on the countries of the former Eastern Bloc it expanded to support development in more than 30 countries from central Europe to central Asia.
• It invests in 38 emerging economies across three continents, according to a set of criteria that aim to make its countries more competitive, better governed, greener, more inclusive, more resilient and more integrated.