All Authorised Dealers in Foreign Exchange
Madam/Sirs,
Indo-Sri Lanka Credit Agreement
dated March 23, 2004 for USD 25 Million
The Government of India have
made available the third tranche of USD 25 million (U.S .Dollar Twenty five
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 March 23, 2004. The credit of USD 25 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 upon
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 the 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 and services to be exported from
India. The value of the contract should be expressed in U.S. Dollars.
(c) All disbursements under
the credit 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 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. The letters of credit should be supported by a copy of the contract
and should contain the following reimbursement clause:
"Reimbursement for the 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 25 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."
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 as per instructions issued
from time to time with prominent superscription reading "Exports to Sri Lanka
under Credit Agreement dated March 23, 2004, 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 engaged in
exports to Sri Lanka and customers 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).