ADB Loans for India's Green Growth and Logistics Modernization

• 30 Dec 2024

Source: PIB 

Why in News? 

Recently, the Government of India and the Asian Development Bank (ADB) signed two crucial loans aimed at strengthening India's infrastructure and supporting sustainable growth. 

• What are the Key Facts Regarding the ADB Loans Taken by India? 
• The USD 500 million loan aims to finance green and sustainable infrastructure projects aligned with India's climate commitments, particularly focusing on connectivity, energy transition, and under-resourced sectors like urban projects, education, and healthcare. 
  • Recipient: The loan, with a sovereign guarantee, will be provided to the India Infrastructure Finance Company Limited (IIFCL). 
  • Role of IIFCL: IIFCL will use the funds to provide long-term capital for infrastructure projects and leverage private sector resources.  
    • This aligns with India's need for private capital investment to meet its net-zero commitments. 
    • IIFCL is a leading public sector infrastructure finance institution, which has funded about 21% of the country’s national highway capacity, comprising nearly 30,000 km of roads. 
• The USD 350 million loan falls under the SMILE program to bolster India’s manufacturing sector and enhance supply chain resilience. 
  • It aims to reduce logistics costs, improve efficiency, generate employment, and promote gender inclusion and supports India’s broader economic development by driving innovation and growth within the logistics sector. 

What is the Strengthening Multimodal and Integrated Logistics Ecosystem (SMILE) Program? 

• About: 
  • The SMILE program is a key initiative by the Government of India, supported by the Asian Development Bank (ADB), to comprehensively reform and modernize the country's logistics sector. 
• Objective: 
  • To enhance India's manufacturing competitiveness and strengthen supply chain resilience by improving logistics efficiency.   
• Focus Areas:  
  • Institutional Strengthening: Improving coordination and planning among various government ministries and agencies involved in logistics at the national, state, and city levels.  
    • This aims to create a more unified and efficient governance structure for the sector.   
  • Standardisation and Infrastructure Development: Promoting standardisation of warehousing and other logistics assets to improve efficiency and attract greater private sector investment in infrastructure development.  
    • This includes promoting multimodal logistics parks (MMLPs). 
  • External Trade Logistics: Streamlining procedures and processes related to imports and exports to reduce delays and costs in international trade. 
  • Technology Adoption: Encouraging the use of smart technologies and automation in logistics operations to improve efficiency, reduce emissions, and enhance service delivery.  
    • This includes promoting digitalization and data sharing.   

Government Initiatives for Logistics Sector 

• Bharatmala Pariyojana 
• PM Gati Shakti Scheme 
• Multi Modal Logistics Parks 
• Dedicated Freight Corridor 
• Sagarmala Projects 
• Multi Modal Logistics Parks (MMLP) 
• National Logistics Policy 2022 
• E-Way Bill Integration with FASTag, RFID 

Asian Development Bank (ADB) 

• About: ADB is a multilateral development bank established in 1966 with a mission to foster economic growth and cooperation in the Asia-Pacific Region. 
• Headquarters: Located in Manila, Philippines. 
• Membership: Comprises 68 members, including 49 from Asia and the Pacific, and 19 from other regions. 
• India and ADB: India is a founding member and the 4th largest shareholder (after Japan, US and China) of ADB. 
• ADB's Support to India: ADB aligns its support with India’s priorities for sustainable, climate-resilient, and inclusive growth, in line with its ADB’s Strategy 2030 and the country partnership strategy for 2023–2027. 
• Recently ADB released the Asia Development Outlook Report 2024.  

 UPSC Civil Services Examination, Previous Year Questions (PYQs) 

Q. The term ‘Regional Comprehensive Economic Partnership’ often appears in the news in the context of the affairs of a group of countries known as (2016)

(a) G20 
(b) ASEAN  
(c) SCO  
(d) SAARC 

Ans: (b)