What changed
Exim Bank signed a Credit Agreement with Mozambique on May 6, 2009, for a USD 30 million Line of Credit to finance rural electrification in Gaza, Zambezia, and Nampula provinces. The credit became effective from August 26, 2009. Last date for opening LCs and disbursement is 48 months from scheduled completion for project exports, or 72 months (May 5, 2015) from execution date for supply contracts.
What it means for you
Indian exporters can now access this LOC to supply goods, services, and consultancy for Mozambique's rural electrification. At least 85% of contract value must be sourced from India, boosting domestic exports. AD banks must ensure shipments are declared on GR/SDF forms and no agency commission is payable under the LOC; any commission must come from exporter's own resources or EEFC account after full payment realization.
What you must do
- Inform exporter constituents about this LOC and direct them to Exim Bank for full details.
- Ensure shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Allow remittance of agency commission only from exporter's own resources or EEFC account 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, services, and consultancy, Exim Bank
What is the purpose of this Line of Credit?
It finances eligible Indian goods, services, machinery, and consultancy for rural electrification projects in Mozambique's Gaza, Zambezia, and Nampula provinces.
What are the sourcing requirements for exporters?
At least 85% of the contract price must be supplied from India; the remaining 15% (excluding consultancy) can be procured from outside India.
Can agency commission be paid under this LOC?
No agency commission is payable under the LOC. If needed, exporters must use their own resources or EEFC account balances, and AD banks can allow remittance only after full contract payment is realized.