What changed
Exim Bank signed a credit agreement on February 17, 2009, effective June 15, 2009, providing a USD 20 million LOC to Myanma Foreign Trade Bank. The LOC finances Indian goods, services, and consultancy for the Thanbayakan Petrochemical Complex upgrade. Last date for LC opening and disbursement is 48 months from project completion for project exports, or 72 months (February 16, 2015) from agreement date for supply contracts.
What it means for you
Indian exporters can now access this LOC to supply eligible goods and services for the Myanmar petrochemical project, with a mandatory 85% Indian content. AD Category-I banks must ensure shipments are declared on GR/SDF forms and can allow agency commission remittances only after full contract payment is realized, using exporter's own resources or EEFC balances.
What you must do
- Inform exporter clients about the LOC details and direct them to Exim Bank for full terms.
- 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 funds or EEFC accounts.
- Verify that at least 85% of contract value is sourced from India for exports under this LOC.
Who it affects
AD Category-I banks handling export transactions, Indian exporters of goods, services, and consultancy to Myanmar, Exim Bank and its counterparty Myanma Foreign Trade 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 agency commission be paid under this LOC?
No agency commission is payable under the LOC itself. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract payment is realized.
What are the key timelines for this LOC?
The credit agreement is effective from June 15, 2009. For project exports, LCs must be opened and disbursed within 48 months from scheduled completion. For supply contracts, the deadline is 72 months from the agreement date (February 16, 2015).