project exports contracts mine

8/3/2019 Project Exports Contracts Mine

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By:Shubham Gupta

MBA-IB SEM 3


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Export of engineering goods on deferredpayment terms and execution of turnkey projectsand civil construction contracts abroad are

collectively referred to as Project Exports. (According to RBI Guidelines for Project Exportsand Service Exports)

It also involves the export of engineeringconsultancy or other engineering services /goods as desired by the project owner.


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Civilengineeringconstruction

projects

Industrialturnkeyprojects

Consultancyservices

Supplies,primarily of

capital goodsand industrialmanufactures


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Construction projects involve civil works,steel structural work, erection of utilityequipment etc.

Examples include projects for buildingdams, bridges, airports, railway lines,roads and bridges, apartments, officecomplexes, hospitals, hotels, anddesalination plants.


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Turnkey projects involve supply of equipmentalong with related services and coveractivities from the conception stage to the

commissioning of a project.

Typical examples of turnkey projects are:supply, erection and commissioning of

boilers, power plants, transmission lines, sub-stations, plants for manufacture of cement,sugar, textiles and chemicals.


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Services contracts, involving provision ofknow-how, skills, personnel and training arecategorised as consultancy projects.

Typical examples of services contracts are:project implementation services,management contracts for industrial plants,hospitals, hotels, oil exploration, charter hireof rigs and locomotives, supervision oferection of plants, CAD/ CAM solutions insoftware exports, finance and accountingsystems.


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Supply contracts involve primarily exportof capital goods and industrialmanufactures.

Typical examples of supply contracts are:supply of stainless steel slabs and ferro-chrome manufacturing equipments, dieselgenerators, pumps and compressors.


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Projects require a host of projectconstruction

Items/goods. Apart from cement and steel,

broadly these products cover :

Construction engineering products Construction equipments & accessories


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A variety of materials and supplies including Builders' Hardware (Doors & Windows), Sanitary & allied products, Electrical, Electro-mechanical & building

automation systems, Building components construction material

(marble, granite, tiles),

Glass & Glazing systems & Architectural products,

Wood/Timber products, Engineering plastic based systems, Construction Equipment & Accessories etc.


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Project Exports from India commenced with amodest beginning in the late 1970s when theconstruction sector in the oil exporting region ofMiddle East underwent a spurt of activity.

Since then, project exports have evolved over theyears, with Indian companies demonstratingcapabilities and expertise spanning a wide range ofsectors, even in challenging environments.

The nature of Project Exports being undertakenreflects the technological maturity and industrialcapabilities in the country.


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Agriculture &Natural Resources

Fisheries

Irrigation &Rural

Development

AgroIndustries

CommercialFarming

Energy

Electric

Thermal

Natural Gas& Oil

Environment

Non

conventionalsources


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Industry

Metals &Minerals

Chemicals/Petrochemicals .fuels, fertilisers,pharmaceuticals

SocialInfrastructure

Education

UrbanDevelopment

Housing

Health &Population

Water Supply &

Sanitation

Transport &Communication

Roads & RoadTransport

Ports &Shipping

Railways

Consultancy

Multisector


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Provisions under RBI guidelines:

Indian exporters offering deferred paymentterms to overseas buyers and those

participating in global tenders for undertakingturnkey/civil construction contracts abroadare required to obtain the approval of the AD

(authorised dealer) Category I banks/EximBank/Working Group at post-award stagebefore undertaking execution of suchcontracts.


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TURNKEY,CONSTRUCTION &

SUPPLY BIDS /CONTRACTS:

Upto Rs. 50 crores :Scheduled Commercial

Banks

Upto Rs. 200 crores :

Exim IndiaAbove Rs. 200 crores :

Working Group

SERVICES BIDS /CONTRACTS:

On Cash Terms :

Upto Rs. 5 crores :

Scheduled CommercialBanks

Upto Rs. 10 crores :Exim India

Above Rs. 10 crores :

Working Group

On DeferredPayment Terms :

For any amount :Working Group


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Inter-Project Transfer of Machinery:

The stipulation regarding recovery of market value (not less thanbook value) of the machinery, etc., from the transferee project hasbeen withdrawn. Further, exporters may use the machinery /equipment for performing any other contract secured by them in any

country subject to the satisfaction of the sponsoring AD Category Ibank(s) / Exim Bank / Working Group and also subject to thereporting requirement and would be monitored by the AD Category I bank(s) / Exim Bank / Working Group.

Inter-Project Transfer of Funds:

AD Category

I bank(s) / Exim Bank / Working Group may permitexporters to open, maintain and operate one or more foreigncurrency account/s in a currency (ies) of their choice with inter-project transferability of funds in any currency or country. The Inter-project transfer of funds will be monitored by the AD Category Ibank(s) / Exim Bank / Working Group.


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Deployment of Temporary Cash Surpluses :Project / Service exporters may deploy their temporary cashsurpluses, generated outside India, in the following instruments /products, subject to monitoring by the AD Category I bank(s) /Exim Bank / Working Group : investments in short-term paper abroad including treasury bills and other

monetary instruments with a maturity or remaining maturity of one yearor less and the rating of which should be at least A-1/AAA by Standard &Poor or P-1/Aaa by Moody's or F1/AAA by Fitch IBCA etc.

deposits with branches / subsidiaries outside India of AD Category Ibanks in India.

Repatriation of Funds in case of On-site Software ContractsThe requirement of repatriation of 30 per cent of contract value inrespect of on-site contracts by software exporter company / firm hasbeen dispensed with. They should, however, repatriate the profits ofon-site contracts after completion of the contracts.


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Criteria for consideration

Economic, political conditions of the importerscountry

Creditworthiness of importersExperience of the applicantImmediate & long term benefits in terms of forex

earningsPeriod of deferred credit, interest rate, adequacy of

advanceNature of security availableFacilities required by applicantEconomic viability of the proposal


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Foreign Currency Accounts abroad

Site Office abroadBridge finance from India

Performance guarantees

Payment of agency commissionExport of equipment from India on re-import


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Government of India has been extending lines of creditto the Governments of friendly developing foreigncountries for a number of years.

These lines of credit are meant for only the Governmentsof foreign countries and not the private organizations of aparticular country, from the Govt. of India.

The main objective behind the extension of these lines ofcredit is two fold; firstly, to promote the export of major

goods of Indian manufacture to these countries, andsecondly, to achieve the political objective i.e. goodwill ofbeneficiary countries.


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Civil construction contracts only MOC approvedcontractors

Company to have good track record adherence

to time & cost schedulesSatisfactory record of repatriation from previousprojects

Profitability of 10% to 15%

Sourcing of materials from IndiaAt least 30% of contract value to be repatriated to

India


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No approval if services on cash basis & nofacilities required

Prompt repartition of earnings

Software companies to repatriate at least

30% of contract valueWhen facilities required, approval from

appropriate authority


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Remit all profits/dues to India

Close foreign currency accounts

Wind up liaison offices

Ensure performance guarantees aredischarged

Liquidate overdrafts abroadObtain completion certificate


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ALL PROVISIONS OF INDIANCOMPANIES ACT-1956

ALL PROVISIONS OF EXIM POLICY

ALL PROVISIONS OF CUSTOMS ACT1962

ALL PROVISIONS OF FOREIGN TRADEACT-1992

ALL SHIPPING LAWS


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THANK

YOU!!!

project exports contracts mine

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