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Reserve Bank of India
Exchange Control Department
Central Office
Mumbai - 400 001
A.P.(DIR Series) Circular No. 56
December 23, 2003
To
All Authorised Dealers in Foreign Exchange
Madam/Sirs,
Indo-Sri Lanka Credit Agreement
dated October 15, 2003 for USD 30 Million
The Government of India have made
available the second tranche of USD 30 million (U.S .Dollar Thirty Million only)
out of the line of credit of USD 100 Million extended to the Government of the
Republic of Sri Lanka under the credit agreement entered into between the two
Governments on January 29, 2001. An agreement to this effect has been signed
by the two Governments on October 15, 2003. The credit of USD 30 million will
be available to the Government of Sri Lanka for importing from India 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
consultancy services, consumer durables and food items - sugar, wheat flour,
rice, red split lentils, wheat grains, which 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 Sri Lanka 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.
2. The broad terms and conditions
of the line of credit are as under:
(a) All contracts will be subject
to the approval of the Government of India and the Government of Sri Lanka
or any agency authorised for this purpose by the Government of Sri Lanka and
shall contain a clause to that effect. All contracts shall be sent to the
Ministry of Finance, Department of Economic Affairs, Government of India,
for approval. After each contract has been approved, intimation thereof will
be sent to the Government of Sri Lanka and to State Bank of India, New Delhi,
by the Ministry of Finance, Government of India.
(b) The credit will cover 100
per cent f.o.b. value of the eligible goods, services and food items to be
exported from India . The value of the contract should be expressed in USD.
(c) All disbursements under the
credit agreement shall be made under letters of credit opened by banks in
Sri Lanka. All letters of credit shall be advised by banks in Sri Lanka to
State Bank of India, New Delhi for onward transmission to the exporters, either
directly 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. The letters of credit should be supported
by a copy of the contract and should contain the following reimbursement clause:
'Reimbursement for 100 per cent
of the f.o.b. value of the contract shall be provided by the State Bank of India,
New Delhi from USD 30 million credit extended by the Government of India to
the Government of Sri Lanka. The Letter of Credit is negotiable after the State
Bank of India has issued an advice that it is operative.'
3. Contracts to be financed under
the agreement dated October 15, 2003 for export of eligible goods and services
should be signed and letters of credit established by December 31, 2004 and
the full amount be drawn under the credit on or before December 31, 2005. If
the full amount is not drawn by the aforesaid date, the balance will be cancelled
and the final instalments of the repayment to be made by the Government of Sri
Lanka shall be reduced accordingly, except as may otherwise be agreed to by
the Government of India.
4. No agency commission should
be allowed in respect of exports under this credit.
5. Shipments under the credit agreement
should be declared on GR/SDF/SOFTEX Form with prominent superscription reading
'Exports to Sri Lanka under Credit Agreement dated October 15, 2003, between
the Government of India and the Government of Sri Lanka'. The number and date
of this circular should be recorded on the GR/SDF/SOFTEX Form in the space provided
therefor.
6. Authorised Dealers may bring
the contents of this circular to the notice of their constituents concerned.
7. The directions contained in
this circular have been issued under Sections 10(4) and 11(1) of the Foreign
Exchange Management Act, 1999 (42 of 1999).
Yours faithfully,
F.R.Joseph
Chief General Manager
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