What changed
Exim Bank signed a Line of Credit agreement with the Government of Mali on April 13, 2007, effective July 24, 2007, for USD 30 million. The LOC covers exports for an electricity transmission and distribution project from Cote d'Ivoire to Mali, with a minimum 85% Indian content requirement. Terminal utilisation is 48 months for project exports and 72 months (by April 12, 2013) for other supply contracts.
What it means for you
AD Category-I banks must facilitate export financing under this LOC while ensuring compliance with FEMA provisions. No agency commission is payable under the LOC, but if needed, exporters can use their own resources or EEFC balances for commission in free foreign exchange after full contract value realisation. Banks should guide exporters to Exim Bank for detailed terms.
What you must do
- Inform exporter constituents about the LOC and its terms, including the 85% Indian content requirement.
- Ensure shipments under the LOC are declared on GR/SDF Forms as per RBI instructions.
- Allow remittance of agency commission only after full contract value realisation and compliance with prevailing rules, using exporter's own resources or EEFC balances.
- Direct exporters to Exim Bank's Mumbai office for full LOC details.
Who it affects
AD Category-I banks handling export transactions, Exporters eligible under India's Foreign Trade Policy, Exim Bank and its counterparties in Mali
What is the minimum Indian content requirement under this LOC?
At least 85% of the goods and services financed under the LOC must be supplied by the seller from India.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange after full contract value realisation, subject to existing RBI instructions.
What is the terminal utilisation period for project exports under this LOC?
For project exports, the terminal utilisation period is 48 months from the scheduled date of contract. For other supply contracts, it is 72 months from the credit agreement execution date, i.e., until April 12, 2013.