What changed
Exim Bank signed a Line of Credit agreement with Ethiopia on April 12, 2012, for USD 47 million to fund Indian exports for sugar industry projects. The credit became effective from July 9, 2012, with specific timelines for letter of credit issuance and disbursement.
What it means for you
Indian exporters can now tap this LOC to supply goods, services, and consultancy for Ethiopia's sugar sector, with at least 75% of contract value sourced from India. Banks must ensure shipments are declared on GR/SDF forms and no agency commission is payable under this LOC.
What you must do
- Inform exporter clients about this 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 and from exporter's own resources or EEFC account, if needed.
- Verify that at least 75% of contract value comprises Indian goods/services.
Who it affects
AD Category-I banks, Indian exporters to Ethiopia, Exim Bank
What is the total value of this Line of Credit?
The LOC is for USD 47 million, as per the agreement dated April 12, 2012.
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) can be procured from outside India.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC, but exporters may use their own resources or EEFC balances for commission in free foreign exchange after full contract value realization.