What changed
Exim Bank signed a Line of Credit agreement with the Government of Seychelles on December 18, 2012, effective from June 10, 2013, for USD 10 million. The credit supports Indian exports of goods, services, machinery, and consultancy for projects funded by Development Bank of Seychelles, with at least 75% of contract value sourced from India.
What it means for you
Indian exporters can now access this LOC to finance eligible exports to Seychelles, with AD banks facilitating Letters of Credit and disbursements within 48 months for project exports or 72 months for supply contracts. No agency commission is payable under the LOC, but exporters may use own resources or EEFC balances for commission after full payment realization.
What you must do
- Inform exporter constituents about the LOC and direct them to Exim Bank for full details.
- Allow remittance of agency commission only after full contract payment realization, using exporter's own resources or EEFC balances.
- Ensure shipments under the LOC are declared on GR/SDF Forms as per RBI instructions.
- Verify that at least 75% of contract value is sourced from India, with possible 10% relaxation for civil construction projects.
Who it affects
AD Category-I banks, Indian exporters to Seychelles, Exim Bank
What is the minimum Indian content required under this LOC?
At least 75% of the contract price must be supplied from India, with a possible 10% relaxation for civil construction projects on a case-by-case basis.
What are the timelines for using this LOC?
For project exports, the last date for opening LCs and disbursement is 48 months from the scheduled completion date of contracts. For supply contracts, it is 72 months from the execution date of the Credit Agreement (i.e., December 17, 2018).
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full payment realization.