India is all set to become the 69th member of the European Bank for Reconstruction and Development (EBRD) after shareholders of the international financial institution gave their nod to the country’s candidature.
The EBRD that its shareholders have agreed to India becoming its member. The move follows the Indian government’s application to seek the EBRD membership back in December 2017 and sets the stage for an increase in joint investment with Indian companies in the Bank’s regions of operation.
The formal membership process will now get underway, which includes the purchase of shares by India at an estimated cost of around €1 million. “This is an important step in the relationship between the EBRD and India, allowing us to build further on already very close ties,” said Suma Chakrabarti, the Indian-origin president of the bank.
The EBRD’s board of governors, which represents all the existing shareholders of the UK-based bank, voted in favour of India’s membership application last week. If all the paperwork is processed in time, India could be ready to take its seat at the table in time for the bank’s annual meeting in Jordan in May.
The London-headquartered EBRD is a multilateral development bank set up in 1991 after the fall of the Berlin wall to promote private and entrepreneurial initiative in emerging Europe. 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.
The bank has worked with leading Indian companies, such as Tata, Mahindra, SREI and Jindal, on investments in its regions, with the value of such joint projects worth an estimated €1 billion. With India now taking a shareholding in the EBRD, it is expected that the scope of these joint initiatives will be further enhanced.
While India will not be a recipient of EBRD financing, it will benefit from the banks expertise and support in the region. “Indian companies are going global and a lot of the push for this membership came from them. India could see the benefit from it and the additional comfort level of working in regions where we have local knowledge,” said Nandita Parshad, EBRD managing director, energy and natural resources, who will be heading to India later this week for meetings with the department of economic affairs on the issue.
“India is taking on a major role in shaping the strategy at a global level, including with the International Solar Alliance. It is important to have a seat at the table,” added Parshad, who will participate in the founding ceremony of the International Solar Alliance in New Delhi on Sunday.
Last year, the EBRD had signed an accord to strengthen ties with the alliance, which was launched during the 2015 UN Climate Change Conference in Paris at the initiative of Prime Minister Narendra Modi and former French President François Hollande as a platform for cooperation among solar resource-rich economies.
According to official estimates, the total value of joint India-EBRD investments in EBRD economies currently stands at €982 million, with the majority of the transactions in the private sector. A recent example of this cooperation is in Turkey where the EBRD and Mahindra & Mahindra are both shareholders in Turkish agricultural machinery manufacturer Hisarlar, after Mahindra bought a 75.1% stake last year.
EBRD has an 18.7% stake in the Turkish company. The bank also works closely with leading Indian chambers such as the Confederation of Indian Industry (CII), the Associated Chambers of Commerce and Industry of India and recently signed a memorandum of understanding with the Federation of Indian Chambers of Commerce and Industry (Ficci).