What changed
Exim Bank signed a Line of Credit agreement with Senegal on March 15, 2010, effective December 8, 2010, for USD 5 million. The credit finances medical equipment, furniture, and accessories for four hospitals. At least 85% of contract value must be sourced from India; up to 15% can be procured from outside India.
What it means for you
Indian exporters can tap this LOC for supply contracts to Senegal, with last disbursement by March 14, 2016 for supply contracts. No agency commission is payable under the LOC, but exporters may use own resources or EEFC balances for commission after full payment realization. AD banks must ensure GR/SDF form declarations for shipments.
What you must do
- Advise exporter customers about the 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.
- Monitor that at least 85% of contract value is sourced from India for eligible contracts.
Who it affects
AD Category-I banks, Indian exporters to Senegal, Exim Bank
What is the last date for opening LCs under this LOC?
For project exports, LCs must be opened within 48 months from the scheduled completion date of the contract. For supply contracts, the last date is 72 months from the execution date of the Credit Agreement, i.e., March 14, 2016.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC. However, if required, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value realization, subject to prevailing RBI instructions.
What is the minimum Indian content requirement for exports under this LOC?
At least 85% of the contract price must be supplied from India. The remaining 15% (excluding consultancy services) may be procured from outside India.