Guidelines on Project & Services Exports
- Issued by RBI under Sec. 47 of Foreign Exchange Management Act, 1999
- Types of Exports covered :
- Export of Goods on Deferred Payment Terms (e.g. Export of machinery, equipment, manufactured products)
- Turnkey Projects (e.g. Setting up of Sugar Plant, Cement Plant)
- Construction Projects (e.g. Construction of Roads, Dams, Bridges)
- Consultancy & Technical Services (e.g. Operation & Maintenance Contracts)
collectively referred to as 'PROJECT & SERVICES EXPORTS'
Definition of Deferred Payment Exports
- In terms of Regulation 9 of the Foreign Exchange Management Act 1999, the amount representing the full export value of goods exported must be realised and repadriated to India within 6 months of date of export.
- Exports where more than 10% of the value is realised beyond the prescribed period, i.e., 6 months from date of shipment, are treated as Deferred Payment Exports
Delegation of Powers
- Post-Award Clearance of Export Contracts
TURNKEY, CONSTRUCTION & SUPPLY BIDS / CONTRACTS :
|Upto Rs. 50 crores||: Scheduled Commercial Banks|
| Upto Rs. 200 crores
|| : Exim Bank|
| Above Rs. 200 crores
|| : Working Group|
SERVICES BIDS / CONTRACTS :
|On Cash Terms :|
|Upto Rs. 5 crores
|| : Scheduled Commercial Banks|
|Upto Rs. 10 crores
||: Exim Bank|
| Above Rs. 10 crores
||: Working Group|
On Deferred Payment Terms :
| For any amount
|| : Working Group |
In-principle commitment at Bid Stage
While dispensing with the requirement of pre-bid clearance of project export proposals vide it's A.D (M.A. Series) Circular No. 9 dated May 5, 2000, RBI has advised exporters to ensure, in their own interest, that conditions as laid down in Memorandum PEM for submission of bids are compiled with.
Project exporters, at the time of submission of bids/offers for execution of project/export contracts overseas, seek in-principle commitment from Exim Bank and other banks for post-award facilities at to ensure proper tie-up of facilities.
Exim Bank issues guarantees required for execution of project export contracts trough overseas banks or directly favouring overseas clients.
Post-Award Clearance of Export Contracts
- Exporter submits application in prescribed from along with copies of contract through his commercial bank for Post Award Clearance.
- Exporter can directly approach Exim Bank for proposals of value limits upto Rs.200 crores.
- On receipt of application and contract copies from the commercial bank, EXIM Bank approves the proposal if the same falls within its delegated powers or convenes Working Group meeting.
- In approved cases, Exim Bank/Working Group accords clearance to the final terms and conditions of the contract including various fund based and non-fund based facilities and requisite exchange control approvals.
- On the basis of package post award clearance granted by Exim Bank/Working Group, final approvals for fund based and non-fund based facilities and requisite exchange control approvals are issued by the concerned institutions and export's bank(s)
Criteria for Consideration for Clearance of Export Proposals
- Exporter's financial position, track record
- Status of overseas client - Government/ Private
- Break-up of contract value - Indian / Third Country / Local
- Risk Assessment of Buyer's Country
- Estimates of Cost and Profitability
- Currency of Payment - Convertible Currency / Local Currency
- Security : Letter of Credit, Bank Guarantee, Government Guarantee, Externalisation undertaking of central bank
- Foreign Exchange Outgo
- Facilities required by the exporter
Salient Parameters of Appraisal for Clearance of Export Proposals
Payment Terms : Advance Payment, Progress / Down Payment,
Deferred Payment, Retention Money
Security : Letter of Credit, Bank Guarantee, Government Guarantee,
Externalisation undertaking of central bank
Availability of ECGC Cover, where necessary
Important Contractual Clauses :
Source of Funding : Multilateral / Local
Foreign Exchange Outgo
Facilities required by the exporter
- Preshipment Inspection
- Force Majeure
- Status of Exporter : Prime Contractor/Sub-contractor/
- Penalty / Liquidated Damages for delay in Contract Execution
- Price Escalation
How to Apply?
The proposal is to be submitted in the prescribed application form (Ref: Memorandum PEM) alongwith implementation schedule, currency-wise cash flows and write-up with regard to site and infra-structural condition, and sub-contracting arrangements envisaged. In case of a non-Government buyer, status report on the client/prime contractor would first need to be obtained.
The completed applications are to be submitted to the sponsoring bank, for consideration, within fifteen days of entering into contract.
It would also be necessary to consult ECGC in advance in cases where corporation's insurance cover and/or counter guarantees are required.
the applications are forwarded by the sponsoring banks with their comments, to the following agencies which constitute the Working Group.
Exim Bank, Mumbai.
Reserve Bank of India,
Exchange Control Department,
Export Credit Guarantee
Corporation of India Limited, Mumbai.
Ministry of Finance,
Department of Economic Affairs,
Banking Division, New Delhi.
Ministry of Finance,
Department of Economic Affairs (FT),
Ministry of Commerce, New Delhi.
Other participating banks
Export Capability Creation Programmes
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