What changed
Exim Bank signed a Line of Credit agreement with Mozambique on July 4, 2013, effective October 4, 2013, for USD 149.72 million. The credit will finance rehabilitation of the Tica-Buzi-Nova Sofala road. Last date for opening LCs and disbursement is 48 months from project completion for project exports, and 72 months from agreement execution (July 3, 2019) for supply contracts.
What it means for you
Indian exporters can now access this LOC to supply goods, services, and consultancy for the Mozambique road project. Banks must ensure at least 75% of contract value is sourced from India. No agency commission is payable under the LOC, but exporters can use own resources or EEFC balances for commission after full payment receipt.
What you must do
- Inform exporter clients 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 payment realization, using exporter's own resources or EEFC balances.
- Verify that at least 75% of contract value is sourced from India for eligible contracts.
Who it affects
AD Category-I banks, Indian exporters of goods, services, machinery, and consultancy, Exim Bank
What is the purpose of this Line of Credit?
It finances rehabilitation of the road between Tica, Buzi, and Nova Sofala in Mozambique, covering eligible goods, services, machinery, and consultancy from India.
What are the sourcing requirements?
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 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 receipt.