What changed
Exim Bank signed a Line of Credit agreement with Mozambique on March 28, 2011, effective June 2, 2011, for USD 20 million. The credit supports Indian exports for enhancing rice-wheat-maize productivity. Last date for LC opening/disbursement is 48 months from project contract completion or 72 months (March 27, 2017) for supply contracts.
What it means for you
Indian exporters can leverage this LOC to secure payments for eligible exports to Mozambique, with Exim Bank financing the buyer. Banks must ensure at least 75% of contract value is sourced from India and no agency commission is payable under the LOC. This opens a structured export financing channel for agricultural machinery and consultancy.
What you must do
- Advise exporter constituents about the LOC and direct them to Exim Bank for full details.
- Ensure shipments under the LOC are declared on GR/SDF Forms as per RBI instructions.
- Allow agency commission remittance only after full contract value realization and from exporter's own resources or EEFC account, if needed.
- Verify that at least 75% of contract value is sourced from India for eligible contracts.
Who it affects
AD Category-I banks handling export transactions, Indian exporters of goods, machinery, and consultancy services to Mozambique, Exim Bank as the credit provider
What is the purpose of this USD 20 million LOC to Mozambique?
It finances Indian exports of eligible goods, services, machinery, and consultancy to enhance rice-wheat-maize cultivation productivity in Mozambique.
What are the sourcing requirements under this LOC?
At least 75% of the contract price must be supplied from India; the remaining 25% (excluding consultancy) may be procured from outside India.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC. If needed, exporters may use their own resources or EEFC balances after full contract value realization, subject to prevailing RBI instructions.