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Indo-Lao Credit Agreement dated November 6, 2002, for USD 10 Million
A.P.
(DIR Series) Circular No. 81 dated 27th February 2003
The
Government of India have extended a line of credit of an amount of USD 10
million (US Dollar Ten Million only) to the Government of the Lao People�s
Democratic Republic under a credit agreement entered into between the two
Governments on November 6, 2002. The credit will be available to the Government
of the Lao People�s Democratic Republic, (Lao PDR), for importing from India
capital goods of Indian manufacture including original spare parts and
accessories purchased along with the capital goods and included in the original
contract as also consultancy services and consumer durables as mentioned in the Annexure.
The contents of 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 and services from India and their import into Laos under the line of
credit shall take place through normal commercial channels and will be subject
to the laws and regulations in force in both the countries. The broad terms and
conditions of the line of credit are as under: -
i)
All contracts will be subject to the approval of the Government of India
and the Government of the Lao PDR and shall contain a clause to that effect. All
contracts should be sent to the Ministry of Finance, Department of Economic
Affairs, Government of India, New Delhi for approval. After each contract has
been approved, intimation thereof will be sent to the Government of the Lao PDR
and to the State Bank of India, New Delhi, by the Ministry of Finance,
Government. of India.
ii)
The credit will be available for 90 per cent of the f.o.b. value of the
eligible goods and services to be exported from India. The 10 per cent of the
f.o.b. value shall be paid by the importer in freely convertible foreign
currency at the time of opening of the letter of credit. Accordingly, letters of
credit should specify that 10 per cent f.o.b. value shall be met out of the
remittances from Lao PDR while the balance 90 per cent shall be financed from
the credit. The value of the contract should be expressed in US Dollars.
iii)
All disbursements under the credit shall be made under letters of credit
opened by the banks in Lao PDR. All letters of credit will be advised by banks
in Lao PDR to the State Bank of India, New Delhi for onward transmission to the
exporter/s either direct or through another bank in India, if any, nominated by
the exporter/s. 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 amount directly payable has been received. 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 India to the Government of the Lao PDR. 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 the 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 10 per cent directly
payable has been received.�
2.
Contracts to be financed under the credit agreement should be signed and
relative letters of credit established by December 31, 2003, and the full amount
be drawn under the credit by December 31, 2004. If the full amount is not drawn
by the aforesaid date, the balance will be cancelled and the final instalment of
the repayment to be made by the Government of the Lao PDR shall be reduced
accordingly, except as may otherwise be agreed to, by the Government of India.
3.
Shipments of goods and export of consultancy services covered by the
credit agreement should be declared on GR/SDF/SOFTEX Form with prominent
superscription reading �Exports to Lao PDR under Credit Agreement dated
November 6, 2002 between the Government of India and the Government of the Lao
PDR. The number and date of this circular should be recorded on the GR/SDF/SOFTEX
Form 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/SOFTEX Forms.
4.
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 capital goods, which require after sales service. In
such cases, commission will have to be paid in Laos 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.
5.
Authorised Dealers may bring the contents of this circular to the notice
of their constituents engaged in exports to Lao People�s Democratic Republic.
6.
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.81 dated February 27, 2003]
Nature
of goods referred to in India- Lao PDR Credit Agreement of 2002
Capital
goods (along with original spare parts and accessories purchased with the
capital goods and included in the original contract), consumer durables and
consultancy.
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