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| Sunday, 03 August 2003 |
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70 percent of Indian Line of Credit already utilised Goods worth US$ 40 million have been imported by 42 parties using the facilities under the Indian Line of Credit (ILOC), a credit facility given by India to Sri Lanka. US$ 20 million worth of sales contracts are presently being executed while US$ 10 million has been set aside for the coconut plantation sector to import new technology and machinery to upgrade the coconut sector, said Chief Manager (Industry and Leasing) Bank of Ceylon Lalith Atapattu, who is in charge of the scheme. Under the ILOC, India offered a credit facility of US$ 100 million (Rs 10 billion) for the importation of capital goods, consumer durables, consultancy services and food items of Indian origin from India. The facility has to be used within three years from 2001. An individual can get a maximum of Rs 20 million as credit under the scheme, but higher amounts will be negotiated on a case-by-case basis. The interest rate is 9.75 per cent and is calculated on a reducing balance and is revised twice a year in March and September. Bank of Ceylon is the apex bank for the scheme in Sri Lanka while the State Bank of India is the Indian counterpart. The repayment period for loans taken under ILOC to import capital goods is nine years including a grace period of two years while it is one year for all other categories with a grace period of three months. The food items category offers a maximum repayment period of one year with no grace period. Customers of Bank of Ceylon and other Participating Credit Institutions satisfying normal credit criteria can apply for a facility under this scheme. Initially, a sales contract must be submitted by the importer to the Department of Economic Affairs at the Ministry of Finance in India through the Indian High Commission. This is done to facilitate the screening process. Once the screening process is completed, the importer can open a Letter of Credit with a commercial bank as all imports are linked to Letters of Credit. All connected charges other than the Freight On Board (FOB) value such as freight, insurance, clearing, bank charges, duties and taxes must be paid by importers at the appropriate time. Among the advantages to the importer are Sri Lankan Rupee facilities upto 100 per cent of FOB value, a nine-year repayment period with a grace period, concessionary rates of interest, wide range of items, scheme operated through selected commercial banks and financial institutions, all facilities through import letters of credit, low shipping and freight charges due to the short distance and short lead time. Atapattu said that US$ 100 million will be released in three stages and we are already in the second stage. "The Made in India show, held at the BMICH recently, gave a tremendous boost to utilising the facility as it showcased India's potential". He said though the private sector has taken a large number of loans compared to the government sector, they are smaller than those taken by the government sector. High-tech agricultural sectors such as drip irrigation, green houses, power, manufacturing, rice milling and tea are some sectors that can benefit and we are promoting them, he added. (SG) |
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