IIT-Hyderabad gets permission to borrow Rs.1,500 cr from Japan

Indian Institute of Technology-Hyderabad (IIT-H) will borrow Rs.1,500 crore from Japan International Cooperation Agency (JICA) to set up infrastructure and expand academic and research capability.

The finance ministry approved the proposal after representatives from the institute and the human resource development ministry presented their case on 10 April, according to three officials, who spoke on condition of anonymity.

“On Tuesday, we got the file back with their (finance ministry’s) approval. Both the countries are expected to formally announce it when Prime Minister Manmohan Singh visits Tokyo in the last week of May,” said an HRD ministry official, one of the three cited above.

This will be the first loan of this magnitude taken by any IIT from an overseas funding agency although some of the older IITs, such as the ones in Chennai, Mumbai, Kanpur and Delhi, received some mentoring and financial assistance from Germany, the erstwhile Soviet Union, the US and the UK.

The Japanese collaboration was conceived in August 2007 by Singh and then Japanese premier Shinzo Abe, a year before IIT-Hyderabad started operation. Of the total loan of Rs.1,776 crore, the Indian government will give 15% and the rest, a little over Rs.1,500 crore, will come from JICA. It will bear an interest rate of 1.4% to be repaid in 30 years, which can be extended to 10 more years, said a second government official.

IIT-H will use the loan to construct nine buildings, including a technology incubation centre, a research park and academic blocks. A portion will also be utilized to buy lab equipment from Japan, according to a document reviewed by Mint.

In the next five years, the institute plans to utilize the loan and scale up its capacity by seven times. IIT-H want to expand the current student strength of 1,056 by almost seven times to 7,500 by 2018 and increase the number of teachers to 750 from the present 105.

“We started with 100% undergraduate courses in 2008 and now the undergraduate and postgraduate (including doctoral fellows) student ratio is almost 50:50,” said an official of IIT-H, one of the three people cited in the first instance. The ratio he spoke about is considered a yardstick to measure an IIT’s research focus.

The proposed research facility will allow private companies to establish R&D labs inside the campus. The incubation centre will aim to create commercially viable technologies.

“IITs stand for research and nurturing innovation and I believe the collaboration with Japan will only be a help. Their companies are known for innovation and the new IIT will benefit immensely from the collaboration and joint research,” said Reema Gupta, an associate director at Indian School of Business, Hyderabad.

Gupta is a member of the IIT-H’s board of governors.