What changed
Exim Bank signed a Line of Credit agreement with the Government of Sierra Leone on November 14, 2008, effective from February 2, 2009, for USD 15 million. The LOC is meant for financing Indian exports of goods like tractors, harvesters, rice mills, and related equipment for commercial agriculture in Sierra Leone. At least 85% of the contract value must be sourced from India, and the last date for opening LCs and disbursement is 48 months for project exports or 72 months from the agreement date for supply contracts.
What it means for you
Indian exporters can now access this Exim Bank LOC to supply agricultural machinery to Sierra Leone with assured financing. AD Category-I banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds; any commission must come from the exporter's own resources or EEFC account after full payment is received. Banks should guide exporters to Exim Bank for detailed terms.
What you must do
- Inform exporter constituents about the USD 15 million LOC to Sierra Leone for agricultural equipment exports.
- Ensure all shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Allow agency commission remittances only after full contract value realization, using exporter's own resources or EEFC balances.
- Advise exporters to contact Exim Bank (Mumbai office or website) for complete LOC details.
Who it affects
AD Category-I banks, Indian exporters of agricultural machinery and equipment, Exim Bank
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 agency commission be paid from the LOC proceeds?
No, no agency commission is payable under this LOC. If needed, the exporter must use their own resources or EEFC account after full contract value is realized.
What is the validity period for opening Letters of Credit under this LOC?
For project exports, LCs must be opened within 48 months from the scheduled completion date of the contract. For supply contracts, the deadline is 72 months from the agreement execution date (November 13, 2014).