The Government of India has achieved another major diplomatic success to promote security and economic cooperation in the Indian Ocean region. A comprehensive ‘Umbrella Line of Credit’ agreement worth Rs 1,250 crore (about $150 million) has been signed between India and the strategically important island country Seychelles. Under this agreement, India will provide financial assistance to Seychelles on easy terms to complete various projects related to its infrastructure, defense and socio-economic development. Experts are considering this as a very important step under India’s ‘SAGAR’ (Security and Growth for All in the Region) policy and ‘Neighborhood First’ policy.
What is ‘Umbrella Line of Credit’?
In simple words, ‘Umbrella Line of Credit’ is a financial structure under which Seychelles can use this fund for projects in many different sectors such as defence, maritime security, health and infrastructure, instead of one big project. This loan or financial assistance will be managed through the Export-Import Bank of India (EXIM Bank). One of the main conditions of this agreement is that Seychelles will import a large part of the goods and services required for these projects from India. Indian companies and exporters will also get huge benefits from this.
Why is this deal very important strategically?
This step of India is being considered very strategic in response to China’s increasing interference in the Indian Ocean and its policy of ‘String of Pearls’. Seychelles is located very close to the major international maritime trade routes (Sea Lanes of Communication) of the Indian Ocean. Strengthening India’s influence there will help in stopping piracy and drug smuggling. The history of military cooperation between India and Seychelles is old. With this new fund, Seychelles’ coastal security and military infrastructure will be further modernized, which will improve coordination with the Indian Navy.
Agreement regarding UPI
Foreign Secretary Vikram Misri said that the National Payments Corporation of India and the Central Bank of Seychelles have also signed a Memorandum of Understanding (MoU) to implement India’s Unified Payment Interface (UPI) in Seychelles. The two sides have also signed an extradition treaty to combat international crimes and a memorandum of understanding for cooperation in the exploration of outer space for peaceful purposes. Interestingly, Seychelles has sought India’s help in setting up an AI and cyber security center as well as an advanced light helicopter—to which PM Modi immediately indicated that New Delhi would consider it.
New chapter in bilateral relations
Trade and cultural relations between India and Seychelles have always been strong. After this new financial agreement of Rs 12.5 billion, a new chapter is going to start between the two countries in the areas of trade, maritime security grid and connectivity. Defense experts believe that this partnership will prove to be a milestone in maintaining peace and stability in the Indian Ocean.
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