The European Investment Bank will give 450 million euros ($512 million) in loan to India to finance the construction of Lucknow's first 23 km-long metro rail line and purchase a fleet of new trains.
An agreement on the first tranche of the credit was signed in Brussels on Wednesday during the 13th EU-India summit attended by Prime Minister Narendra Modi.
The loan represented the largest project financing by European Union's official bank, also the world's largest international public bank, in India since its engagement in the country began more than 20 years ago and the most significant investment in sustainable public transport outside Europe, Luxembourg based European Investment Bank (EIB) said.
The 450 million euro ($512 million) long-term loan - expected to cover half of the total project cost for the Lucknow Metro - will be used to finance the first metro line in Lucknow, including both construction of the 23 km-long new metro line and a fleet of metro trains.
The line is the first part of a broader metro network planned for Lucknow, the capital city of Uttar Pradesh. When it becomes operational, the new metro is expected to increase the use of public transport from 10 per cent to an estimated 27 per cent in the city of three million people, the bank said in a statement.
EIB president Werner Hoyer said the bank would expand its support for long-term investments in India and unveiled plans to open a regional representation for South Asia in New Delhi by the end of this year.
The EIB has supported long-term investment across India that has helped the country harness renewable energy, strengthened industry and reduced carbon emissions.
The bank recognises that the time is right to increase its engagement in India, Hoyer said.
"The first metro line in Lucknow is a flagship project not only for Uttar Pradesh and India, but also for the bank's strengthened global commitment to support transformational investment," Hoyer said.
The loan agreement was signed by India's Ambassador to Belgium, Luxembourg and the EU Manjeev Singh Puri and EIB Vice President for Asia Jonathan Taylor in the presence of Modi, European Commission President Jean-Claude Juncker and European Council President Donald Tusk.
The EIB had committed loans totalling more than 1.34 billion euros for long term investment in India since the cooperation began in 1993.
