What changed
RBI has informed AD Category-I banks about a new Line of Credit agreement between Exim Bank and the Government of Uzbekistan. The LoC, effective September 12, 2022, provides USD 448 million for social infrastructure and development projects. Exports under this LoC must follow standard declaration procedures, and no agency commission is payable except from exporter's own resources.
What it means for you
Indian exporters can now access this LoC for eligible goods and services to Uzbekistan, with a mandatory 75% local sourcing requirement. Banks must ensure compliance with FEMA provisions and existing commission payment rules. This opens a structured financing channel for Indian exports in the social infrastructure space.
What you must do
- Inform exporter constituents about the LoC details and direct them to Exim Bank for complete information.
- Verify that shipments under this LoC are declared on Export Declaration Form/Shipping Bill as per RBI instructions.
- Allow agency commission remittances only after full export value realization and from exporter's own resources or EEFC account.
- Ensure compliance with FEMA sections 10(4) and 11(1) while processing transactions under this LoC.
Who it affects
AD Category-I banks, Indian exporters of goods and services to Uzbekistan, Exim Bank
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 exporters pay agency commission on exports under this LoC?
No agency commission is payable under the LoC. However, exporters may use their own resources or EEFC balances for commission in free foreign exchange after full export value realization.
When does this LoC become effective and what is the utilization period?
The LoC is effective from September 12, 2022, and the terminal utilization period is 60 months from the scheduled completion date of the project.