Germany has agreed to offer India a €1.09bn loan - the biggest since 1958 - for various development projects, the Indian government said on 5 February.
India's finance minister P Chidambaram and Germany's minister for economic cooperation and development Gerd Mueller signed the agreement, under which Europe's strongest economy will offer loans at lower interest rates to sectors such as power, affordable housing and microfinance.
Mueller is accompanying German President Joachim Gauck, who is in India along with a business delegation.
"Energy, environment and sustainable economic development are priority sectors under bilateral development cooperation between India and Germany, which now spans a period of more than 50 years," the statement said.
India is planning to build the world's largest solar power plant, which will spread across 77 square kilometres and cover an area larger than the size of Manhattan.
The project will be over ten times larger than any other solar facility built so far. It will have a capacity of 4,000 megawatts, for an estimated lifetime of a quarter of a century.
The venture will be executed by six state-owned companies, who have said the project will cost around $4.4bn and take seven years to complete. Reportedly, the plant will be built near Sambhar Salt Lake in the Rajasthan state, in the north-west of the country.
According to officials, solar power created is expected to supply 6.4 billion kilowatt-hours per year.
Rajasthan Bars FDI
Last week, Rajasthan joined New Delhi in barring foreign direct investment (FDI) in the multi-brand retail business at a time when growing political divide threatens the country's economic reform agenda.
Rajasthan is ruled by the country's main opposition Bharatiya Janata Party (BJP), and the decision comes amid strong opposition to FDI plans from local shop keepers. The Hindu nationalist BJP is, in principle, against allowing FDI in multi-brand retail.
At present, less than half of India's 28 states support the policy, making it difficult for retail giants Wal-Mart, Tesco and Carrefour to start multi-brand operations in the country.
Germany is India's largest trading partner in Europe and bilateral trade reached $21.6bn in the 2012/13 fiscal year.
However bilateral trade reduced by about 8% from the 2011/12 fiscal year, according to India's trade ministry.