What changed
Exim Bank executed a Line of Credit agreement with Mozambique on September 20, 2012, effective December 26, 2012, for USD 250 million to improve power supply. The credit covers eligible goods, machinery, equipment, and services from India, with at least 75% of contract value sourced from India. Last dates for LC opening and disbursement are 48 months from the scheduled completion date(s) of contract(s) for project exports and 72 months (September 19, 2018) from the execution date of the Credit Agreement for supply contracts.
What it means for you
Indian exporters can now access this LOC to finance power sector exports to Mozambique, with a mandatory 75% Indian content requirement. AD banks must ensure GR/SDF form declarations and handle commission payments only after full contract realization, using exporter's own resources or EEFC balances. No agency commission is payable under the LOC itself.
What you must do
- Advise exporter clients about the LOC details and direct them to Exim Bank for full terms.
- Ensure all shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Allow agency commission remittances only after full contract value realization, using exporter's own funds or EEFC balances.
- Verify that at least 75% of contract value is sourced from India for each eligible contract.
Who it affects
AD Category-I banks handling export transactions, Indian exporters of power sector goods and services, Exim Bank as the LOC provider
What is the minimum Indian content requirement under this LOC?
At least 75% of the contract price must be supplied by sellers from India; the remaining 25% can be procured from outside India.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC itself. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full payment of the contract value.
What are the last dates for opening LCs and disbursement?
For project exports, 48 months from the scheduled completion date of the contract; for supply contracts, 72 months from the execution date of the Credit Agreement (September 19, 2018).