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September 24, 2001
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RBI lists incentives for some high-value exports

The Reserve Bank of India on Monday announced several financial incentives for high-value exports of pharmaceuticals, agro-chemicals, transport equipment, cement, iron and steel and electrical machinery.

The package of incentives, formed in consultation with the central government, will be valid for one year starting from October 1, a statement from the RBI said.

Manufacturer-exporters with export contracts worth Rs 1 billion or more in one year will be eligible for the scheme, it said.

Under the scheme, exporters will get credit at concessional rates for up to 365 days at both the pre-shipment and post-shipment stages instead of for a maximum of 270 days for pre-shipment and a maximum of 180 days for post-shipment.

The interest rate, now set by banks on a commercial basis at up to 4 percentage points above the prime lending rate, will be reduced to a maximum of half a percentage point above the PLR.

The EXIM Bank and other participating banks will be permitted to extend buyers' credit of Rs 2 billion without reference to the central bank.

In addition, while approving export contracts, the EXIM bank will have the freedom to decide the minimum advance or down payment, security and availability of insurance cover from the Export Credit Guarantee Corporation subject to a post facto report.

Indian exporters will also be able to import raw material on credit for beyond 180 days at LIBOR plus one percent instead of at LIBOR plus 0.75 per cent.

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