What changed
Exim Bank signed a Line of Credit agreement with Cambodia on September 14, 2010, effective December 14, 2010, for USD 15 million. The credit is for financing eligible goods, machinery, equipment, and consultancy services from India for the Stung Tassal Water Development project. Last date for opening LCs and disbursement is 48 months from project completion or 72 months from agreement execution for supply contracts.
What it means for you
Banks must ensure that at least 75% of contract value is sourced from India for exports under this LOC. No agency commission is payable under this LOC, but exporters can use own resources or EEFC balances for commission after full payment realization. AD banks need to guide exporters on obtaining full LOC details from Exim Bank.
What you must do
- Advise exporter constituents about the LOC and its terms, including the 75% Indian sourcing requirement.
- 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 and compliance with existing guidelines.
- Direct exporters to Exim Bank's Mumbai office or website for complete LOC details.
Who it affects
AD Category-I banks, Exporters dealing with Cambodia under this LOC, Exim Bank
What is the minimum Indian content required for exports under this LOC?
At least 75% of the contract price must be supplied from India, including goods, services, and consultancy. The remaining 25% can be procured from outside India for non-consultancy items.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the 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 RBI guidelines.
What are the timelines for opening LCs and disbursement?
For project exports, the last date is 48 months from the scheduled completion date of contracts. For supply contracts, it is 72 months from the agreement execution date (September 13, 2016).