What changed
Exim Bank signed a credit agreement with Mozambique on December 2, 2008, effective April 13, 2009, for a USD 25 million LOC. The credit finances an IT Park project including an incubator, research center, and technology park. At least 85% of contract value must be sourced from India, with up to 15% from outside India.
What it means for you
Banks must facilitate exports under this LOC by handling GR/SDF forms and allowing commission payments from exporters' own resources or EEFC accounts after full payment realization. No agency commission is payable under the LOC itself. This supports Indian exporters in the IT infrastructure sector in Mozambique.
What you must do
- Inform exporter constituents about the LOC and direct them to Exim Bank for full details.
- Ensure shipments under the LOC are declared on GR/SDF forms per RBI instructions.
- Allow remittance of agency commission from exporters' own resources or EEFC accounts only after full contract payment realization.
- Verify that at least 85% of contract value is sourced from India for eligible contracts.
Who it affects
AD Category-I banks, Indian exporters of goods and services for IT Park projects in Mozambique, 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.
What are the disbursement timelines for this LOC?
For project exports, letters of credit and disbursement must be completed within 48 months from the scheduled completion date. For supply contracts, the deadline is 72 months from the credit agreement execution date (December 1, 2014).
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 payment realization.