Ethiopia is seeking another $300m loan from India for its Ethio-Djibouti railway project, estimated to cost a total of $1.2bn.
India has already allocated $300m for the development of the 665km rail line to connect the country with neighbouring Djibouti.
India's external affairs ministry additional secretary Gurjit Singh told IANS that the support to the railway is part of India's support for regional integration in Africa.
"This is the first time we are doing a project which covers more than one country," Singh said.
"We are just facilitating and working with them on the feasibility study, from that we will discover how our part of the implementation will come through. Once all that is settled and the project goes on stream, we see no difficulty in periodic and timely disbursements."
The first phase of the Ethiopia-Djibouti railway project entails construction of a 317km long line between Addis Ababa and Mieso.
China Railway Group (CREC), the project's main contractor, and Ethiopian Railway entered into an agreement last October 2011 for the rail project.
The feasibility study of the project has been carried out in eight months while construction is scheduled to be completed in three and half years.
The entire railway network will have about eight main routes that will connect to more than 49 urban centres by 2015, where railway stations are to be built in the future.
Under the five-year national Growth and Transformation Plan, the Ethiopian Government aims to develop a 2,395km railway network nationwide, out of which 1,808km is planned to be completed by 2015.