"We have today approved a policy on bilateral official development assistance for development cooperation with bilateral partners and modified the existing guidelines," Power Minister Piyush Goyal said after the cabinet meeting.
The decision will provide a flexible regime and enable the Ministry of External Affairs and the Ministry of Finance to enter into bilateral agreements with different countries which will help India generate large amounts of investments at concessional terms for long durations.
It will also help India in developing infrastructure in expeditious manner, he said.
India has bilateral cooperation agreement with countries such as Japan. India is developing Delhi-Mumbai Industrial Corridor (DMIC) project with the assistance of Japan.
The minister also said that the arrangement would largely focused on infrastructure development and will ensure that 50 per cent of the loan is of untied nature so that it can also encourage more Indian companies to participate in the projects which are awarded through international competitive bidding.
"... The overall framework has been made more liberal to allow faster flow of funds into India through bilateral cooperation with newer countries," he added.