What changed
Exim Bank signed a Line of Credit agreement with Mozambique on July 4, 2013, effective October 4, 2013, for USD 19.72 million. The credit finances a rural drinking water project extension executed by M/s Southern Borewells (P) Ltd. Key terms include a 75% Indian content requirement and timelines for LC opening and disbursement.
What it means for you
Indian exporters can now access this LOC to supply goods and services for Mozambique's water project, with assured payment from Exim Bank. AD banks must ensure compliance with FEMA rules, including GR/SDF form declarations and no agency commission from the LOC proceeds. The 75% local sourcing rule boosts Indian exports.
What you must do
- Inform exporter constituents 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 agency commission remittances only after full contract value realization and from exporter's own resources or EEFC account.
- Verify that at least 75% of contract value is sourced from India for any financed contract.
Who it affects
AD Category-I banks, Indian exporters of goods, services, and consultancy, Exim Bank, M/s Southern Borewells (P) Ltd
What is the total value of this Line of Credit?
The LOC is for USD 19.72 million, as per the agreement between Exim Bank and the Government of Mozambique.
What is the Indian content requirement under this LOC?
At least 75% of the contract price must be supplied from India; the remaining 25% can be procured from outside India.
Can exporters pay agency commission from the LOC proceeds?
No, no agency commission is payable under this LOC. Exporters may use their own resources or EEFC balances for commission after full payment realization.