Introduction: The Reserve Bank of India (RBI) has issued a significant circular (RBI/2024-2025/42, A.P. (DIR Series) Circular No. 10) detailing the approval of a Government of India-supported Line of Credit (LoC) amounting to USD 23.37 million to the Government of the Co-operative Republic of Guyana. This credit, facilitated by the Export-Import Bank of India (Exim Bank), is designated for the procurement of two Hindustan 228-201 aircraft from Hindustan Aeronautics Ltd. The agreement, effective from April 8, 2024, underscores India’s commitment to strengthening its trade relations and boosting its export footprint.
Agreement Overview The agreement between Exim Bank and the Government of Guyana, dated March 15, 2024, marks a pivotal step in enhancing bilateral trade relations. The LoC, valued at USD 23.37 million, will enable Guyana to procure two state-of-the-art Hindustan 228-201 aircraft. This transaction highlights the prowess of India’s aviation manufacturing sector and reinforces the global competitiveness of Hindustan Aeronautics Ltd.
Eligibility and Procurement Terms The export of goods and services under this LoC is governed by the Foreign Trade Policy of the Government of India. A crucial stipulation of the agreement mandates that at least 75% of the contract value must be sourced from Indian sellers, thereby ensuring a substantial benefit to the Indian economy. The remaining 25% of goods and services can be procured internationally, allowing flexibility in fulfilling the contract requirements.
Operational Timeline The agreement stipulates that the LoC will be operational from April 8, 2024, with the disbursement window remaining open for 48 months post the scheduled project completion date. This extended timeline ensures that all procedural and logistical aspects can be adequately addressed, facilitating smooth execution of the project.
Regulatory Compliance Shipments under this LoC are to be declared in the Export Declaration Form/Shipping Bill in accordance with the RBI’s instructions. This ensures transparency and compliance with regulatory frameworks. Furthermore, no agency commission is payable for exports under this LoC. Exporters, if necessary, may utilize their own resources or the balances in their Exchange Earners’ Foreign Currency Account for commission payments, subject to RBI regulations.
Banking Instructions The circular directs all Category-I Authorized Dealer (AD) banks to disseminate the details of this LoC to their exporter clients. Exporters are encouraged to seek comprehensive information from Exim Bank to fully leverage this credit facility. The banks are also tasked with ensuring adherence to the guidelines and procedures set forth by the RBI and FEMA.
Legal Framework The directions issued in this circular are in accordance with sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999. These directives are designed to operate within the broader legal context, ensuring that all transactions under this LoC are legally sound and compliant with Indian financial regulations.
Conclusion: The RBI’s approval of a USD 23.37 million Line of Credit to Guyana for the procurement of Hindustan 228-201 aircraft is a testament to India’s expanding economic and trade influence. This strategic move not only promotes the export of Indian goods and services but also fortifies bilateral ties with Guyana. The detailed guidelines and compliance measures outlined by the RBI ensure that the execution of this agreement will be smooth, transparent, and beneficial to all parties involved. This initiative marks a significant milestone in India’s export policy and its global trade ambitions.
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Reserve Bank of India
RBI/2024-2025/42
A.P. (DIR Series) Circular No. 10
June 11, 2024
All Category – I Authorised Dealer Banks
Madam/ Sir
Export-Import Bank of India (Exim Bank)’s Government of India-supported Line of Credit of USD 23.37 mn to the Government of the Co-operative Republic of Guyana (GO-GUY), for procurement of two Hindustan 228-201 aircraft from Hindustan Aeronautics Ltd.
Export-Import Bank of India (Exim Bank) has entered into an agreement dated March 15, 2024 with the Government of the Co-operative Republic of Guyana (GO-GUY), for making available to the latter, Government of India supported Line of Credit (LoC) of USD 23.37 mn (USD Twenty-Three Million Three Hundred Seventy Thousand Only) for procurement of two Hindustan 228-201 aircraft from Hindustan Aeronautics Ltd. The export of eligible goods and services from India, as defined under the agreement, would be allowed subject to their eligibility under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this agreement. Out of the total credit by Exim Bank under the agreement, goods, works and services of the value of at least 75 per cent of the contract price shall be supplied by the seller from India, and the remaining 25 per cent of goods and services may be procured by the seller for the purpose of the eligible contract from outside India.
2. The Agreement under the LoC is effective from April 08, 2024. Under the LoC, the last date for disbursement will be 48 months after scheduled completion date of the project.
3. Shipments under the LoC shall be declared in Export Declaration Form/Shipping Bill as per instructions issued by the Reserve Bank from time to time.
4. No agency commission is payable for export under the above LoC. However, if required, the exporter may use his own resources or utilize balances in his Exchange Earners’ Foreign Currency Account for payment of commission in free foreign exchange. Authorised Dealer (AD) Category- I banks may allow such remittance after realization of full eligible value of export subject to compliance with the extant instructions for payment of agency commission.
5. AD Category – I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain complete details of the LoC from the Exim Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or from their website www.eximbankindia.in
6. The directions contained in this circular have been issued under section 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.
Yours faithfully
(N Senthil Kumar)
General Manager
