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Indo-Cambodia Credit Agreement dated November 6, 2002 for USD 10 Million
A.P.
(DIR Series) Circular No. 85 dated 4th March 2003
The
Government of India have extended a line of credit of USD 10 million (US Dollar
Ten Million only) to the Royal Government of Cambodia under a credit agreement
entered into, between the two Governments on November 6, 2002. The credit will
be available to the Royal Government of Cambodia for import from India of
capital goods of Indian manufacture including original spare parts and
accessories purchased together with the capital goods and included in the
original contract as also project and consultancy services connected with the
project as specified in the Annexure. The contents of
the Annexure may be modified by way of additions, deletions or substitutions
from time to time as may be mutually agreed to between the two Governments. The
credit will not cover third country imports. The export of goods from India and
their import into Cambodia shall take place through normal commercial channels
and will be subject to the laws and regulations in force in both the countries.
2.
The broad terms and conditions of the line of credit are as under:
(a) All export contracts under the line of credit will
be subject to the approval of the Government of India and the Royal Government
of Cambodia and shall contain a clause to that effect. The contracts should be
forwarded to the Ministry of Finance, Department of Economic Affairs, Government
of India, New Delhi, for approval. The Royal Government of Cambodia and the
State Bank of India, New Delhi, will be informed in respect of each approved
contract by the Ministry of Finance, Government of India.
(b) The credit of USD 10 million will be available on
f.o.b. (free on board) basis and will cover 90 per cent value of the eligible
goods to be exported from India. The contracts should be expressed in
U.S.Dollars. Ten per cent of the f.o.b. value should be paid by the importers in
freely convertible foreign currency at the time of opening the letters of
credit. Letters of credit should specify that the10 per cent of f.o.b. value
shall be met out of remittances from Cambodia while the balance 90 per cent
shall be financed from the credit.
(c) All disbursements under the credit should be made
under letters of credit opened by banks in Cambodia. All letters of credit shall
be advised by banks in Cambodia to the State Bank of India, New Delhi, for
onward transmission to the exporters either direct or through another bank in
India, if any, nominated by the exporters. Normal commercial practices followed
in respect of advising payments under letters of credit will be adopted to
ensure that the remaining 10 per cent of the amount of letter of credit is
received in US Dollars. All claims to the State Bank of India for payment of 90
per cent of the f.o.b. value will need to be supported by a certificate of the
negotiating bank that the 10 per cent directly payable has been received.
Further, each letter of credit should be supported by a copy of the contract and
should contain the following reimbursement clause:
"Reimbursement for 90 per cent of the f.o.b. value of
the contract shall be provided by the State Bank of India, New Delhi, from USD
10 million credit extended by the Government of the Republic of India to the
Royal Government of Cambodia. The letter of credit is negotiable after the State
Bank of India has issued an advice that it is operative. The letter of credit
will be made operative by the State Bank of India after verifying that the
reimbursement from the credit is sought for 90 per cent of the f.o.b. value only
and it will be responsibility of the negotiating bank to ensure that the
remaining 10 per cent of the amount of the letter of credit is received in US
Dollars. All claims to the State Bank of India for payment of 90 per cent of the
f.o.b. value will need to be supported by a certificate of the negotiating bank
to the effect that the 10 per cent directly payable has been received."
3. The contracts to be financed under the credit
agreement for items in the Annexure should be signed and relative letters of
credit established by December 31, 2003 and the full amount in respect of the
contracts be drawn by December 31, 2004. If the full amount of the loan is not
drawn by this date, the balance will be cancelled and the final instalments of
the repayment to be made by the Royal Government of Cambodia shall be reduced
accordingly, except, as may otherwise be agreed to, by the Government of India.
4. Shipments of goods covered by the credit
agreement should be declared on GR/ SDF Forms, with a prominent superscription
reading 'Exports to Cambodia under credit agreement dated November 6, 2002
between the Government of India and the Royal Government of Cambodia'. The
number and date of this circular should also be recorded on the GR/ SDF Forms in
the space provided therefor. On receipt of the full payment of the bills in the
manner indicated above, authorised dealers should certify duplicate copies of
the relative GR/SDF Forms.
5. Ordinarily, no agency commission shall be
payable in respect of exports financed under the line of credit. However,
Reserve Bank may consider on merit, requests for payment of commission upto a
maximum extent of 5 per cent of the f.o.b. value in respect of goods, which
require after sales service. In such cases, commission will have to be paid in
Cambodia by deduction from the invoice value of the relevant shipment and the
reimbursable amount will be 90 per cent of the f.o.b. value minus the commission
paid. Approval for payment of commission should be obtained before the relevant
shipment is effected.
6. Authorised Dealers may bring the contents of
this circular to the notice of their constituents engaged in exports to
Cambodia.
7. The directions contained in this circular
have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange
Management Act, 1999 (42 of 1999).
ANNEXURE
[A.P.
(DIR SERIES) CIRCULAR NO. 85 DATED MARCH 4, 2003]
NATURE
OF GOODS REFERRED TO IN INDO-CAMBODIAN CREDIT AGREEMENT OF 2002
Capital
goods (along with original spare parts and accessories purchased with the
capital goods and included in the original contract), project and consultancy
services connected with the project likely to be set up from the credit.
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