What changed
Exim Bank signed a Line of Credit agreement with Senegal on December 19, 2012, effective June 26, 2013, for USD 19 million to finance a Fisheries Development Project. The circular outlines the operational details, including sourcing requirements and timelines for letters of credit and disbursement.
What it means for you
Indian exporters can now access this LOC to supply goods, services, and consultancy for Senegal's fisheries project, with a mandatory 75% Indian content. AD banks must ensure compliance with FEMA and RBI guidelines on GR/SDF forms and agency commission rules. This opens a structured export financing channel for Indian firms.
What you must do
- Inform exporter clients about the 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 agency commission remittances only after full contract value realization, using exporter's own resources 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, Indian exporters of goods, services, and consultancy, Exim Bank
What is the last date for opening Letters of Credit under this LOC?
For project exports, LCs must be opened within 48 months from the scheduled completion date of the contract. For supply contracts, the deadline is 72 months from the execution date of the Credit Agreement, i.e., December 18, 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 contract value realization, subject to prevailing RBI instructions.
What is the minimum Indian content requirement for exports under this LOC?
At least 75% of the contract price must consist of goods and services (including consultancy) supplied from India. The remaining 25% may be procured from outside India.