What changed
Exim Bank signed a Line of Credit agreement with Vietnam on July 11, 2013, effective December 27, 2013, for USD 19.50 million. The credit will finance eligible goods, machinery, equipment, works, and services from India for two projects. At least 75% of contract value must be supplied from India, with up to 25% procured from outside India.
What it means for you
Indian exporters can now access this LOC to secure payments for exports to Vietnam under the specified projects. Banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds. The circular reinforces compliance with FEMA and Foreign Trade Policy.
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 remittance of agency commission 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 eligible contracts.
Who it affects
AD Category-I banks, Indian exporters to Vietnam, Exim Bank
What is the total amount of this Line of Credit?
The LOC is for USD 19.50 million, as per the agreement between Exim Bank and the Government of Vietnam.
What are the last dates for opening Letters of Credit and disbursement?
For project exports, it is 48 months from the scheduled completion date of the contract. For supply contracts, it is 72 months from the execution date of the Credit Agreement, i.e., July 10, 2019.
Can agency commission be paid under this LOC?
No agency commission is payable from the LOC proceeds. However, exporters may use their own resources or EEFC balances for such payments after full contract value realization.