What changed
Exim Bank signed a Line of Credit agreement with Benin on October 19, 2009, effective February 16, 2010, for USD 15 million. The credit covers eligible Indian goods, machinery, equipment, and services, with a minimum 85% Indian content. Last date for LC opening/disbursement is 48 months from project completion or 72 months (October 18, 2015) for supply contracts.
What it means for you
Indian exporters can now tap this LOC to supply railway and agricultural equipment, and consultancy for a cyber city in Benin. Banks must ensure at least 85% of contract value is sourced from India and handle GR/SDF declarations. No agency commission is payable under the LOC, but exporters can use own resources or EEFC balances for commission 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 after full contract value realization, using exporter's own resources or EEFC balances.
- Verify that at least 85% of contract value is sourced from India for each eligible contract.
Who it affects
AD Category-I banks, Indian exporters of goods and services to Benin, 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% (excluding consultancy) can be procured from outside India.
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.
What are the key timelines for this LOC?
The credit agreement is effective from February 16, 2010. For project exports, LCs must be opened within 48 months of scheduled completion; for supply contracts, the last date is October 18, 2015 (72 months from execution date).