Mubasher: The Indian government was in talks with foreign lenders, Germany’s development bank KfW Group, the World Bank and some Canadian institutions to extend up to $14.5 billion lines of credit to millions of its small firms, Reuters reported, citing two officials.

The German bank’s India office confirmed the discussions, which were at their early stage, although the main focus was on providing credit to back small enterprises’ solar power generation.

The Indian government aims to tap up to one trillion Indian rupees (INR) of loans from foreign institutions, as local banks were not ready to provide sufficient capital for small firms, which were seen as essential in creating new jobs.

“We are exploring, we are having discussions with various funding agencies if something can be done [for such firms],” one of the officials told the news agency.

The Asian nation’s ministry for micro, small and medium enterprises (MSME) is discussing the proposal to pull in foreign lenders with the ministry of finance, which would take the final decision, the official said.

India’s 63 million firms in the MSME sector account for over a quarter of the nation’s manufacturing and service output.

Such firms should be re-vitalised, for Prime Minister Narendra Modi’s government to boost the economy, after the gross domestic product (GDP) declined in the three-month period ended last March to 5.8%, which marked the weakest growth since five years and well a rate of 8% or more targeted by the government.

The push for foreign loans followed the Indian government’s announcement earlier this month that it eyed around INR 700 billion via overseas sovereign bond issuance.

Credit availability for small and medium enterprises, representing around 45% of the nation’s total exports, deteriorated due to a liquidity crisis in the shadow banking sector, where large banks struggling to remain solvent.