RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI - 400 001 February 8, 2000 A.D.(G.P. Series) Circular No.2 To All Authorised Dealers in Foreign Exchange Dear Sirs, Export of goods and services against repayment of
State Credit in U.S. Dollars granted by Russian Federation
for financing long-term projects in the field of technical
co-operation and for purchasing special equipment Attention of the authorised dealers is drawn to A.D.(G.P. Series) circulars No.19 and 12 dated 1st December 1994 and 27th August 1996 respectively wherein the procedure for repayment of State Credit in U.S. dollars granted by Russian Federation for financing long-term projects in the field of technical co-operation and for purchasing special equipment in accordance with the agreement dated 17th September 1992 and for effecting exports thereagainst is detailed. 2. The Government of India and the Government of Russian Federation have signed fresh Protocols dated 30th June 1994 and 21st December 1998 incorporating necessary amendments to the agreement dated 17th September 1992. Accordingly, the repayment of credit shall be made as follows:- (i) FOR CREDIT ALREADY UTILISED (a) For contracts under which advance payments were made in full before 30th June 1994. Five per cent of the cost of equipment shall be paid within 30 days after the signing of the respective contract. Another five per cent shall be paid within 30 days from the date of notification to the Indian side about the readiness of the equipment for despatch. The balance ninety per cent and interest thereon shall be paid in equal annual instalments within 7 years beginning from the year following the year in which the relevant credit was utilised. (b) For contracts under which advance payments have not been made or made partially before 30th June 1994. Ten per cent of the cost of the special equipment shall be paid within 30 days from the date of signing the contract and not later than 30th July 1994 as per the contracts signed before 30th June 1994. Another five per cent shall be paid within 30 days from the date of notification to the Indian side about the readiness of the equipment for despatch. The balance eighty-five per cent and interest thereon shall be paid in equal annual instalments within 7 years beginning from the year following the year in which the relevant credit was utilised. The advance payments and balance amounts alongwith interest mentioned at (a) & (b) above shall be paid in denominated U.S. dollars. Advance payments shall be credited directly to the existing U.S. dollar Escrow account of the Russian bank/organisation. The balance amount and interest shall be credited to the Central account denominated in non-repatriable U.S. dollars of the Bank for Foreign Economic Affairs of the USSR (BFEA) maintained with RBI and the funds in this account will be utilised for export of goods and services from India to Russian Federation. ii) FOR THE BALANCE CREDIT TO BE UTILISED
BY THE ARMED FORCES OF INDIA The portion of value of Special equipment paid for in cash can be increased upto 25% as indicated below provided that appropriate agreement is reached. Fifteen per cent of the cost of Special equipment shall be paid within 30 days of the date of coming of appropriate contract into force, five per cent within 30 days from the date of notification to the Indian side about the readiness of the equipment for despatch and another five per cent shall be paid in accordance with the terms of the appropriate contract. The balance seventy five per cent and interest thereon shall be paid in equal annual instalments within 7 years starting from the year immediately following the year of utilisation of the relevant part of the credit. The advance payment and repayment of credit alongwith interest shall be made by the Government of India in free convertible U.S. dollars by crediting the amount to the U.S. dollar account of the Bank for Foreign Economic Affairs of the U.S.S.R. (BFEA) maintained with Canara Bank, International Service branch, Mumbai. There would be no restrictions or limitation in regard to transferring the funds credited into the above mentioned account of the BFEA, to its accounts with banks in the third countries. Authorised dealers may remit the repayments in free convertible U.S. dollars received from Ministry of Defence to Canara Bank for credit to the above account. The advice of remittance should enclose the authorisation from Ministry of Defence and carry full details of the credit arrangement. 3. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973(46 of 1973) and any contravention or non observance thereof is subject to the penalties prescribed under the Act. Yours faithfully, B. MAHESHWARAN Chief General Manager |