FRAMEWORK FINANCING AGREEMENT VISAKHAPATNAM–CHENNAI INDUSTRIAL CORRIDOR DEVELOPMENT PROGRAM Parties This Framework Financing Agreement (FFA) dated 05 July 2016 is between India, acting by its President, and Asian Development Bank (ADB). MFF Investment Program India and the State of Andhra Pradesh (the State) are committed to implement the Visakhapatnam–Chennai Industrial Corridor Development Program (VCICDP) following the roadmap and investment program described in Schedule 1 hereto. The State’s core infrastructure investment program as outlined as part of its draft Vision 2030 is $30.8 billion and the short- term needs are placed at $11.42 billion (2015-2020).1 The Comprehensive Development Plan (2015), an exercise in parallel, prioritized actions for Visakhapatnam–Chennai Industrial Corridor (VCIC), focused on (i) improving connectivity (193 roads), (ii) industrial infrastructure improvements in 19 estates, (iii) associated power transmission enhancements for the industries, and (iv) upgrade to urban infrastructure with special reference to Visakhapatnam. The prioritized investment program (ADB component) over the next 8 years (2016-2024) is $505 million equivalent, including a $500 million loan and a $5.0 million grant under the Urban Climate Change the Urban Climate Change Resilience Trust Fund (UCCRTF) under the Urban Financing Partnership Facility, but excluding a $125 million policy-based loan component. The Investment Program will complement the ongoing efforts of the Government of Andhra Pradesh (GoAP) to enhance industrial growth and create high quality jobs. It will support priority infrastructure investments in the Visakhapatnam– Chennai Industrial Corridor (VCIC) and complement the GoAP’s efforts on policy reforms and institutional development in the state’s industrial sector. The subprojects under the Investment Program will focus on (i) internal roads, water supply, drainage, and industrial effluent treatment in selected industrial clusters; (ii) roads for connectivity between industrial nodes, ports, and urban areas, and road safety measures; (iii) power transmission and distribution system in the industrial corridor; and (iv) smart cities planning with climate change resilience and continuous water supply in Visakhapatnam, the key city in the VCIC. 1 Details are in the Sector Roadmap (Schedule 1). 2 Multitranche Financing The Multitranche Financing Facility (the Facility) is intended to Facility finance the subprojects under the roadmap and investment program, provided that such subprojects comply with the criteria set out in Schedule 4 hereto, and that understandings set out in the FFA are complied with in terms of (i) location in the corridor; (ii) entity of significance in terms of contribution to growth and/or manufacturing; (iii) eligible sectors (urban environmental services, industrial area infrastructure, intrastate connectivity, and improving quality of power); (iv) compliance with safeguards; and (v) an acceptable economic and financial rate of return. This FFA does not constitute a legal obligation on the part of ADB to commit any financing. At its sole discretion, exercised reasonably, ADB has the right to deny any financing request made by India, cancel uncommitted portion of the Facility, and withdraw India’s right to request any financing tranche under the Facility. Financing tranches may be made available by ADB provided matters continue to be in accordance with general understandings and expectations on which the Facility is based and which are laid out in this FFA. Likewise this FFA does not constitute a legal obligation on the part of India to request any financing. India has the right not to request any financing under the Facility. India has the right at any time to cancel any uncommitted portion of the Facility. India and ADB may exercise their respective rights to cancel the Facility or any uncommitted portion hereof, and ADB may exercise its right to refuse a financing request, by giving written notice to such effect to the other party. The written notice will provide an explanation for the cancellation or refusal and, in the case of a cancellation, specify the date on which the cancellation takes effect. Financing Plan The financing plan for the Investment Program is summarized below. Details are set out in Schedule 1 hereto. Amount Share (%) of Source ($ Million) Total Asian Development Bank 500.0 69.4 - ordinary capital resources (loan) Urban Climate Change Resilience a Trust Fund under the Urban 5.0 0.6 Financing Partnership Facility (grant) Government (State of Andhra 215.0 30.0 Pradesh) Total 720.0 100.0 a Financing partners: the Rockefeller foundation and the governments of Switzerland, the United Kingdom and the United States. Financing Terms ADB will provide financing for the subprojects and components 3 under the Facility, as and when the subprojects and components are ready and a request is made under a periodic financing request. Each loan will constitute a tranche. Each tranche may be financed under terms different from the financing terms of previous or subsequent tranches. The choice of financing terms will depend on the project, and ADB’s financing policies, all prevailing at the time the tranche is documented in a legal agreement and signed. Tranches may be provided in sequence or simultaneously, and some may overlap in time with each other. Commitment charges are not payable on the Facility. They are payable only on financing actually committed by ADB as a loan. ADB rules on commitment charges, which are in effect when the legal agreements are signed for a tranche, will apply with respect to such tranche. Amount The maximum financing amount available under the Facility is five hundred and five million US dollars ($505 million) including UCCRTF grant of $5.0 million. It will be provided in individual loans from ADB’s ordinary capital resources and grant from the UCCRTF. Availability Period The closing date of any tranche will be on or before 30 June 2025. The last Periodic Financing Request (PFR) is expected no later than 30 June 2019. Terms and Conditions Each tranche will be used to finance components and a range of subprojects that meet agreed eligibility criteria, described in Schedule 4 of this FFA. India will provide the proceeds of each tranche to the State, and cause these to be applied by the State to the financing of expenditures of the Roadmap and Investment Program in accordance with conditions set forth in this Agreement and the legal agreements for each loan. Execution The Executing Agency for the Investment Program will be the State of Andhra Pradesh, through its Department of Industries and Commerce (DOIC). The Executing Agency will implement the Investment Program in accordance with principles set forth in Schedule 1 to this Agreement, as supplemented with more details in the legal agreements for each tranche. Periodic Financing India may request, and ADB may agree, to provide loans under Request the Facility to finance the Investment Program and its related components and subprojects upon the submission of a Periodic Financing Request (PFR). Each PFR should be submitted by India and confirmed by ADB. India will make 4 available to the State and through the State to the implementing agencies, the proceeds of the tranche in accordance with the related PFR, and legal agreements for the tranche. Each individual tranche will be for an amount of no less than fifty million US dollars ($50 million) or its equivalent. ADB will review the PFR(s) and, if found satisfactory, prepare the related legal agreements. The components and subprojects for which financing is being requested under a PFR will be subject to the selection criteria set out in Schedule 4 hereto, satisfactory due diligence, and preparation of relevant safeguards and fiduciary frameworks and other documents. The Facility will be implemented in accordance with the general framework set out in Schedule 3 to this FFA and the Facility Administration Manual agreed between India and ADB. Until notice is otherwise given by India, the Secretary, Additional Secretary, Joint Secretary, Director, or Deputy Secretary in the Department of Economic Affairs of the Ministry of Finance of the Government of India are designated as authorized representative of India for the purposes of executing PFRs. General Implementation The Facility will be implemented in accordance with the general Framework framework set out in Schedule 3 hereto. Procedures The tranches to be provided under the Facility will be subject to following procedures and undertakings: (i) India will have notified ADB of forthcoming PFR at least 15 days in advance of the submission of the PFR. (ii) India will have submitted a PFR in the format agreed with ADB. (iii) ADB may in its sole discretion, with reasons provided, decline to authorize the negotiation and execution of any legal document for a loan. (iv) If ADB confirms acceptance of the PFR, the legal agreements will be negotiated and executed by the parties. PFR Information The PFR will be substantially in the form attached hereto, and will contain the following details: (i) Tranche amount; (ii) Description of subprojects and institutional capacity development and implementation support to be financed; (iii) Cost estimates and financing plan; (iv) Implementation arrangements specific to the subprojects; (v) Confirmation of the continuing validity of and adherence to the understanding in this Agreement; (vi) Confirmation of compliance with the provisions under previous Loan Agreement(s) and