What changed
Exim Bank signed a credit agreement with Rwanda on October 9, 2007, effective October 15, 2008, for a USD 20 million line of credit (first tranche of USD 80 million) to finance a power project by BHEL and Angelique International. The LOC mandates at least 85% of contract value from Indian goods/services, with up to 15% from outside India. Last date for LC opening/disbursement is 48 months from project completion or 72 months from agreement execution (October 8, 2013) for supply contracts.
What it means for you
AD Category-I banks must process exports under this LOC with strict adherence to the 85% Indian content rule and timeline limits. No agency commission is payable under the LOC, but banks can allow commission remittances from exporter's own resources or EEFC after full payment realization. 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 agency commission remittances only after full contract value realization and from exporter's own resources or EEFC.
- Direct exporters to Exim Bank for complete LOC details.
Who it affects
AD Category-I banks, Exporters dealing with Rwanda power project, Bharat Heavy Electricals Limited and Angelique International Ltd.
What is the minimum Indian content required under this LOC?
At least 85% of the contract price must be supplied from India; the remaining 15% can be procured from outside India, excluding consultancy services.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC itself, but exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value realization.
What are the key timelines for this LOC?
The credit agreement is effective from October 15, 2008. For project exports, LCs must be opened and disbursed within 48 months of scheduled completion; for supply contracts, within 72 months from October 9, 2007 (i.e., by October 8, 2013).