Japan will provide 110 billion yen in low-interest loans to India, Foreign Minister Yoriko Kawaguchi said Tuesday.
The loans will constitute the first official credit extended by Japan to India since a freeze was lifted on foreign assistance imposed after nuclear weapons tests in 1998. Kawaguchi outlined the decision during a meeting with Indian External Affairs Minister Yashwant Sinha, Japanese officials said.
The loan package includes a 45 billion yen credit line that will finance the construction of a thermal power plant and other infrastructure projects.
This is the first yen loan program since October 2001, when Japan, in recognition of India's efforts to fight terrorism in the wake of the Sept. 11 attacks on the United States, lifted its embargo on yen loans for new projects.
Kawaguchi and Sinha also discussed regional issues and Pyongyang's nuclear arms program. Kawaguchi urged India to improve its strained ties with Pakistan and asked New Delhi to sign the Comprehensive Test Ban Treaty.
The treaty must be ratified by all 44 declared and potential nuclear powers for it to take effect. China and the U.S. have not ratified the treaty, while India, Pakistan and North Korea have yet to sign it.
Kawaguchi also viewed a new subway in New Delhi financed partly by previous yen loans.