What changed
Exim Bank signed a Line of Credit agreement with Sudan on January 26, 2009, effective July 6, 2009, for USD 25 million. The credit finances Indian goods and services for the Elduem Sugar Project, with a minimum 85% Indian content requirement. Last dates for LC opening and disbursement vary by contract type: 48 months for project exports, 72 months for supply contracts.
What it means for you
Indian exporters can now access this LOC to supply to Sudan's sugar project, but must ensure at least 85% of contract value is sourced domestically. AD banks must enforce the no-agency-commission rule, though exporters can use own resources or EEFC balances for commission in free forex after full payment realization. This expands export credit avenues while maintaining strict compliance with FEMA and RBI guidelines.
What you must do
- Inform exporter clients about the LOC details and direct them to Exim Bank for full terms.
- Ensure GR/SDF forms are correctly filed for all shipments under this LOC.
- Verify that at least 85% of contract value is sourced from India before processing remittances.
- Do not allow agency commission payments under this LOC; only permit commission from exporter's own resources or EEFC after full payment realization.
Who it affects
AD Category-I banks, Indian exporters to Sudan, Exim Bank
What is the minimum Indian content requirement for exports under this LOC?
At least 85% of the contract price must be supplied from India. The remaining 15% can be procured from outside India, but consultancy services are excluded from this 15% allowance.
Can agency commission be paid under this Line of Credit?
No agency commission is payable under this LOC. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value is realized, subject to prevailing RBI instructions.
What are the last dates for opening LCs and disbursement?
For project exports, the last date is 48 months from the scheduled completion date of the contract. For supply contracts, it is 72 months from the execution date of the Credit Agreement (i.e., January 25, 2015).