What changed
Exim Bank signed a Line of Credit agreement with Sri Lanka on January 17, 2012, effective April 11, 2012, for USD 382.37 million. The credit covers track-laying, signaling, and other mutually approved contracts, with at least 75% of contract value sourced from India.
What it means for you
Indian exporters can now access this LOC for eligible goods and services to Sri Lanka, with financing terms including 48-month disbursement for project exports and 72 months for supply contracts. Banks must ensure no agency commission is paid from LOC funds, though exporters can use own resources for commissions after full payment.
What you must do
- Inform exporter clients about the LOC and its terms, including the 75% Indian content requirement.
- Ensure shipments under the LOC are declared on GR/SDF forms as per RBI instructions.
- Allow remittance of agency commission only from exporter's own resources or EEFC after full contract payment.
- Direct exporters to Exim Bank for full LOC details.
Who it affects
AD Category-I banks, Indian exporters to Sri Lanka, Exim Bank
What is the total value of the Line of Credit to Sri Lanka?
The LOC is for USD 382.37 million, covering railway projects and other mutually approved contracts.
What is the minimum Indian content required under this LOC?
At least 75% of the contract price must be supplied from India; up to 25% of goods and services (excluding consultancy) can be sourced from outside India.
Can agency commission be paid from the LOC funds?
No, agency commission is not payable under this LOC. Exporters may use their own resources or EEFC balances for commission after full payment is received.