What changed
Exim Bank signed a LoC agreement with Guinea on December 5, 2019, effective from August 11, 2021, for USD 170 million. The credit will finance exports for the Grand Conakry-Horizon 2040 water supply project. Shipments must be declared on Export Declaration Forms, and no agency commission is payable under this LoC.
What it means for you
Indian exporters can now access this LoC to supply goods and services for Guinea's water project, with a mandatory 75% local sourcing requirement. AD banks must facilitate remittances for commission only after full export value realization and in compliance with existing rules. This opens a targeted export financing avenue for Indian firms in infrastructure projects.
What you must do
- Inform exporter clients about the LoC details and direct them to Exim Bank for complete information.
- Ensure export shipments under this LoC are declared on Export Declaration Forms as per RBI instructions.
- Allow remittance of agency commission only after full export value realization and using exporter's own resources or EEFC balances.
- Verify that at least 75% of contract value is sourced from India for each eligible contract.
Who it affects
AD Category-I banks, Indian exporters of eligible goods and services, Exim Bank
What is the purpose of this USD 170 million LoC to Guinea?
It finances the strengthening of drinking water supply in Grand Conakry-Horizon 2040 project in Guinea, with at least 75% of contract value sourced from India.
Can exporters pay agency commission under this LoC?
No agency commission is payable. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full export value realization, subject to extant instructions.
What is the terminal utilization period for this LoC?
The terminal utilization period is 60 months from the scheduled completion date of the project, with the agreement effective from August 11, 2021.