STEELMAKER Tata Steel has arranged a £3.7bn loan from a banking consortium to fund construction of a factory in eastern India.

In August, Tata Steel announced an 89 per cent slump in first-quarter net profit from a year earlier, due to falling demand in its key European market.

The reported deal comes as fundraising for infrastructure projects has slowed, with banks hesitant to provide money to companies amid delayed project approvals and a tougher economic climate.

Steelmakers globally have been suffering from a slowdown in demand as industrial growth loses pace in emerging economies such as India and China and expansion remains sluggish in advanced western economies. Across the North- East, Tata Steel has about 1,500 employees.