What changed
Exim Bank signed a Line of Credit agreement on June 24, 2008, effective September 19, 2008, providing USD 20 million to Myanma Foreign Trade Bank. The credit supports exports for setting up an ACSR wire and galvanized iron wire manufacturing facility in Myanmar. Last disbursement for supply contracts is June 23, 2014; for project exports, 48 months from contract completion.
What it means for you
Indian exporters can now access this LOC to finance eligible goods and services for the Myanmar project, with a mandatory 85% Indian content. AD Category-I banks must facilitate remittances and ensure compliance with FEMA and RBI guidelines on GR/SDF forms and agency commission rules. No agency commission is payable under this LOC, but exporters may use own resources for such payments after full realization.
What you must do
- Advise exporter constituents about this LOC and direct them to Exim Bank for full details.
- Allow remittance of agency commission only after full contract value realization and compliance with prevailing instructions.
- Ensure shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Verify that at least 85% of contract price is sourced from India for financed exports.
Who it affects
AD Category-I banks, Indian exporters of goods and services to Myanmar, Exim Bank
What is the purpose of this Line of Credit?
It finances Indian exports for setting up an Aluminum Conductor Steel Reinforced (ACSR) wire manufacturing factory in Myanmar, with annual capacity of 10,000 tonnes ACSR and 4,000 tonnes galvanized iron wire.
What is the Indian content requirement under this LOC?
At least 85% of the contract price must be supplied from India. The remaining goods and services (excluding consultancy) may be procured from outside 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 balances to pay commission in free foreign exchange after full contract value realization, subject to RBI guidelines.