Indo-Cambodia Credit Agreement dated November 6, 2002 for USD 10 Million
A.P. (DIR Series) (2002-2003) Circular No. 85, dated 4-3-2003, issued by Exchange Control Department, RBI
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
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.