EXPORTS UNDER DEFERRED PAYMENTS : You have learnt that all export proceeds must be surrendered to an authorised dealer within 180 days from the date of shipment. Exporters are required to obtain permission from the Reserve Bank through authorised dealers in the event of non-realisation of export proceeds within the prescribed period. However, realising the special needs of exports of engineering goods and projects, Reserve Bank has formulated special schemes permitting deferred credit arrangements. This will enable realisation of export proceeds over a period exceeding six months. Hence, contracts for export of goods and services against payment to be secured partly or fully beyond 180 days are treated as deferred payment exports. The Credit

Word is termed as deferred payment term credit.

For financing under deferred credit system a single point approval mechanism within a three tier system operates.

This system includes:

i) Commercial banks who are authorised dealers in foreign exchange in India, can provide in principle clearance for contracts valued upto Rs.25 crores. They can avail refinance from EXIM bank.

ii) EXIM bank is empowered to give clearances for contracts of value of above Rs.25 crores and upto Rs. 100 crores.

iii) A working group considers proposals of contracts of value beyond Rs. 100 crores. The working group consists of representatives of all the above institutions to provide single window clearance.

Deferred credit facility is normally allowed only for export of engineering goods, turnkey projects involving rendering of services like designing, civil construction and erection and commissioning of plant or factory along with supply of machinery, equipment and materials.

Project exports eligible for export finance are as follows:

i) Turnkey Projects: These projects involve supply of equipment along with related services like design, detailed engineering, civil construction, erection and commissioning of plants, etc.

ii) Construction projects involve civil works, steel structural works as well as associated supply of construction materials and equipment.

iii) Technical and consultancy service contracts involve provision of personnel, furnishing of knowhow, skills, operation and maintenance services and management contracts.

These services include:

a) Engineering services contracts involve supply of services such as design, erecting, commissioning or supervision of erector and commissioning.

b) Consultancy services contracts involve preparation of feasibility studies, project reports, preparation of designs and advice to the project authority on specifications for plants and equipments.