What changed
Exim Bank signed a Line of Credit agreement with the Government of Lao PDR on September 13, 2010, effective November 2, 2010, for USD 72.55 million. The credit will finance a 230 KV transmission line (USD 34.68 million) and the Nam Boun 2 hydropower project (USD 37.86 million). At least 75% of goods and services must be sourced from India.
What it means for you
Indian exporters can now access this LOC to supply eligible goods and services for these two Lao projects, with financing backed by Exim Bank. AD Category-I banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds. Banks can allow commission remittances from exporters' own resources after full contract value realization.
What you must do
- Inform exporter constituents about the LOC and direct them to Exim Bank for full details.
- Ensure all shipments under this LOC are declared on GR/SDF Forms as per RBI instructions.
- Do not allow any agency commission payment from LOC proceeds; permit remittances only from exporter's own resources after full contract value realization.
- Verify that at least 75% 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 Lao PDR, Exim Bank
What is the total value of the Line of Credit to Lao PDR?
The LOC is for USD 72.55 million, covering two projects: a transmission line (USD 34.68 million) and a hydropower project (USD 37.86 million).
What is the Indian content requirement under this LOC?
At least 75% of the contract price must consist of goods and services (including consultancy) supplied from India. The remaining 25% may be procured from outside India.
Can exporters pay agency commission under this LOC?
No agency commission is payable from the LOC proceeds. 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.