What changed
Exim Bank signed a Line of Credit agreement with Zimbabwe on June 21, 2013, effective July 25, 2013, for USD 28.60 million. The credit is for financing eligible goods, services, and consultancy from India for the Deka Pumping Station and River Water Intake System upgrade. At least 75% of contract value must be sourced from India; up to 25% can be procured outside India.
What it means for you
Indian exporters can now access this LOC to supply machinery, equipment, and consultancy for Zimbabwe's water infrastructure project. AD banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds; exporters can use their own EEFC balances for commissions after full payment realization. The LOC supports India's export push under the Foreign Trade Policy.
What you must do
- Advise exporter constituents about the LOC and direct them to Exim Bank for full details.
- Ensure all shipments under this LOC are declared on GR/SDF forms per RBI instructions.
- Allow remittance of agency commission only after full contract value realization and from exporter's own resources or EEFC account.
- Monitor that at least 75% of contract value is sourced from India as per the agreement.
Who it affects
AD Category-I banks, Indian exporters of goods, services, and consultancy, Exim Bank
What is the purpose of this Line of Credit?
It finances the upgradation of Deka Pumping Station and River Water Intake System in Zimbabwe, with eligible goods, services, and consultancy from India.
What are the sourcing requirements for exporters?
At least 75% of the contract price must be supplied from India; the remaining 25% can be procured from outside India.
Can agency commission be paid under this LOC?
No, the LOC does not allow agency commission. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full payment realization.