What changed
Exim Bank signed a credit agreement with Zambia on March 29, 2012, effective June 8, 2012, for a USD 50 million line of credit. The credit supports exports of goods, services, and consultancy for pre-fabricated health posts in Zambia, with a 75% Indian content requirement. Last dates for LC opening and disbursement vary: 48 months from project completion or 72 months from agreement execution for supply contracts.
What it means for you
Indian exporters can tap this credit line to supply to Zambia's health sector, with Exim Bank financing eligible contracts. Banks must ensure compliance with FEMA rules, including GR/SDF form declarations and no agency commission from the credit proceeds. This opens a structured export opportunity but requires strict adherence to sourcing and documentation norms.
What you must do
- Advise exporter clients 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.
- Allow agency commission remittances only from exporter's own resources or EEFC accounts after full contract payment realization.
- Verify that at least 75% of contract value is sourced from India for eligible contracts.
Who it affects
AD Category-I banks, Indian exporters to Zambia, Exim Bank
What is the minimum Indian content required under this LOC?
At least 75% of the contract price must be supplied from India; the remaining 25% can be procured from outside India, excluding consultancy services.
Can agency commission be paid from the LOC proceeds?
No, agency commission is not payable under this LOC. Exporters may use their own resources or EEFC balances for commission in free foreign exchange after full payment realization.
What are the timelines for LC opening and disbursement?
For project exports, LCs must be opened and disbursed within 48 months from scheduled contract completion. For supply contracts, the deadline is 72 months from the agreement execution date (March 28, 2018).