$350 million ADB loan to Modernise India’s Logistic sector

The Asian Development Bank (ADB) has signed an agreement with the government of India to provide a $350 million policy-based loan for its Strengthening Multimodal and Integrated Logistics Ecosystem Program. The loan will support modernisation and strengthen the country’s logistic sector.

This is the second loan provided by the ADB to the government of India’s ‘Strengthen the Multimodal and Integrated Logistics Ecosystem Program’. In December 2022, ADB provided a $250 million policy-based loan.

The loan agreement was signed by the Department of Economic Affairs (DEA), Ministry of Finance; Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry; and the ADB in New Delhi on 20 December 2024. 

What is a Policy-Based Loan?

The policy-based loan of the ADB refers to the loans given to a country that has committed to reforming the economy or a sector of the economy. The country also faces a shortage of funds to carry out the agreed reform. 

The loan is directly provided to the government’s general budget instead of paying for a particular project.

However, the loan amount is transferred into the borrower's account only if the borrower has undertaken the agreed policy reforms or actions.

Use  of the ADB loan 

The present $350 million loan will finance the second subprogram of the Strengthening Multimodal and Integrated Logistics Ecosystem Program,

The first subprogram supported institutionalising policies to strengthen interagency coordination and standardising processes to encourage private sector investment and improve operational efficiency.  

The second subprogramme of the Strengthening Multimodal and Integrated Logistics Ecosystem Program aims to establish and operationalise a comprehensive policy framework to enhance logistics efficiency through

• Institutional bases to be developed at the national, state, and city levels for multimodal logistics infrastructure development:
• To strengthen supply chains and encourage greater private sector investment by standardising warehousing and other logistics assets. 
• Improve and strengthen efficiencies in external trade logistics and
• Encourage low-carbon emission logistics by adopting smart systems for efficient and low-emission logistics.

ADB is a regional multilateral agency with 69 member countries, and its headquarters are in Manila, Philippines.

It provides loans, grants, and technical assistance to the member countries for development purposes and to deal with climate change.

It was established in 1966.

Also Read: ADB Provides $42 Million Loan to Maharashtra Coastal Management Project.