The State-run Power Construction Corporation of China (PCC) has signed a $2.4 billion deal with Infrastructure Leasing and Financial Services Limited (IL&FS), the infrastructure development firm, to set up a coal-fired power plant in Tamil Nadu, the Chinese company said on Friday.

PCC will set up four 660 MW generators for the second phase of a 3,600 MW IL&FS power project in Tamil Nadu, the company said in a statement. The deal, Reuters reported, is an EPC — engineering, procurement and construction — contract, with the company saying it would create 10,000 jobs in India.

The deal is the third major China-related move by IL&FS in recent months, underscoring the infrastructure firm's growing interest in this market.

Just this week, IL&FS Transportation Networks Limited (ITNL) said it was looking to raise money through the issue of Yuan-denominated bonds through its Singapore-based subsidiary. The bonds will be listed on the Hong Kong Stock Exchange.

Last year, IL&FS became the first Indian company to acquire a stake in a State-owned Chinese enterprise, with its ITNL International Private Limited (IITL) subsidiary signing a $150 million to acquire 49 per cent equity in an infrastructure company in the south-western municipality of Chongqing.

Friday's agreement, Indian officials said, was a welcome development that reflected “increasing interest” from Chinese power companies in the India market.

“These deals are good for the relationship,” an official said. “When businesses can work together and create the right environment, it takes away a lot of distrust. And the more such deals there are, the more that can be done politically too”.

Keywords: IL&FSCNH bonds