What changed
Exim Bank signed an agreement with the Government of Togolese Republic on June 23, 2021, for a USD 40 million LoC to finance solar electrification projects. The LoC became effective from December 7, 2021, with a terminal utilization period of 60 months after project completion. RBI circular advises AD Category-I banks to inform exporters and ensure compliance with FEMA provisions.
What it means for you
Indian exporters can now access this LoC to supply goods and services for Togo's solar village electrification, with a mandatory 75% Indian content. Banks must ensure no agency commission is paid from LoC proceeds, though exporters can use their own forex resources. This opens a specific, government-backed export financing channel for renewable energy projects.
What you must do
- Notify exporter constituents about the Exim Bank LoC for Togo's solar project and direct them to Exim Bank for full details.
- Ensure shipments under this LoC are declared on Export Declaration Forms per RBI instructions.
- Verify that at least 75% of contract value is sourced from India before processing export documents.
- Do not allow agency commission payments from LoC proceeds; only permit remittance from exporter's own resources or EEFC after full export value realization.
Who it affects
AD Category-I banks handling export documentation, Indian exporters of solar equipment and related services, Exim Bank as LoC administrator
What is the minimum Indian content requirement under this LoC?
Goods, works, and services of at least 75% of the contract price must be supplied from India; the remaining 25% may be procured from outside India.
Can exporters pay agency commission on exports under this LoC?
No agency commission is payable from LoC proceeds. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full export value realization.
What is the validity period of this LoC?
The LoC is effective from December 7, 2021, and the terminal utilization period is 60 months after the scheduled completion date of the project.