What changed
Exim Bank signed a Line of Credit agreement with the Government of Lao PDR on September 9, 2013, effective November 26, 2013, for USD 30.94 million. The credit will finance construction of storage dams and irrigation systems in four major provinces. Last date for LC opening and disbursement is 48 months from project completion for project exports, or 72 months (September 8, 2019) from agreement date for supply contracts.
What it means for you
Indian exporters can now bid for these Laos projects with assured financing from Exim Bank. Banks must ensure at least 75% of contract value is sourced from India and handle GR/SDF declarations. No agency commission is payable under the LOC, but exporters can use their own resources or EEFC balances for commission after full payment realization.
What you must do
- Inform exporter customers 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 remittance of agency commission 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 eligible contracts.
Who it affects
AD Category-I banks handling export transactions, Indian exporters of goods, services, machinery, and consultancy, Exim Bank and its financing operations
What is the minimum 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 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 after full contract value realization, subject to prevailing RBI instructions.
What are the key timelines for this LOC?
The credit agreement is effective from November 26, 2013. For project exports, LCs must be opened and disbursed within 48 months from scheduled completion. For supply contracts, the deadline is 72 months from the execution date (September 8, 2019).