What changed
Exim Bank signed a Line of Credit agreement with Ethiopia on December 1, 2010, effective January 10, 2011, for USD 213.31 million. This circular informs AD Category-I banks about the terms, including sourcing requirements and timelines for Letters of Credit and disbursement.
What it means for you
Indian exporters can now access this LOC to finance sugar industry projects in Ethiopia, with a mandatory 75% Indian content. Banks must ensure shipments are declared on GR/SDF forms and no agency commission is payable under the LOC, though exporters can use their own resources for commissions after full payment.
What you must do
- Inform exporter clients about the LOC details and direct them to Exim Bank for full terms.
- Ensure shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Verify that at least 75% of contract value is sourced from India before processing transactions.
- Allow remittance of agency commission only after full contract payment is realized, using exporter's own resources or EEFC balances.
Who it affects
AD Category-I banks, Indian exporters to Ethiopia, Exim Bank
What are the timelines for using this LOC?
For project exports, Letters of Credit and disbursement must be completed within 48 months from the scheduled completion date(s) of the contract. For supply contracts, the deadline is 72 months from the execution date of the Credit Agreement (December 1, 2010), i.e., November 30, 2016.