What changed
Exim Bank signed a credit agreement with Mozambique on July 4, 2013, effective October 4, 2013, for a USD 47 million LOC. The credit supports construction of 1,200 houses, with mandatory Indian sourcing of at least 65% of goods/services (75% for consultancy). Last LC/disbursement dates are 48 months from project completion or 72 months from agreement execution (July 3, 2019) for supply contracts.
What it means for you
Banks must process LCs and disbursements within the stipulated timelines and ensure GR/SDF form compliance. No agency commission is payable under this LOC, but exporters can use own resources or EEFC balances for commission after full contract realization. This facilitates Indian exports and supports bilateral trade.
What you must do
- Inform exporter customers about the LOC details and direct them to Exim Bank for full terms.
- Ensure shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Allow remittance of agency commission only after full contract value realization, using exporter's own resources or EEFC balances.
- Monitor LC opening and disbursement deadlines: 48 months from project completion or 72 months from July 4, 2013 for supply contracts.
Who it affects
AD Category-I banks, Exporters dealing with Mozambique, Exim Bank, Indian suppliers of goods, services, and consultancy for housing projects
What is the minimum Indian content requirement under this LOC?
At least 65% of goods and services (by value) must be sourced from India; for consultancy services, the requirement is up to 75% of the contract price.
Can agency commission be paid under this LOC?
No agency commission is payable under the LOC itself. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value is realized.
What are the key deadlines for LCs and disbursement?
For project exports, the last date is 48 months from the scheduled completion date of the contract. For supply contracts, it is 72 months from the agreement execution date (July 4, 2013), i.e., by July 3, 2019.