Global Trade Alert

On 11 September 2012, the Reserve Bank of India amended the trade credits facility for import of capital goods.
 
The amendement allows companies in the infrastructure sector to avail such credits for a maximum period of five years. Normally, trade credit is allowed for a maximum period of three years and minimum period of one year. 
 
Other conditions that will apply to the infrastructure sector :
i) the trade credit must be contracted for a period not less than 15 months and not be in the nature of short term roll-overs, 
ii) Banks are not permitted to issue Letters of Credit/guarantees/Letter of Undertaking/Letter of Comfort in favour of overseas supplier, bank and financial institutions for a period beyond three years.
 
On 24 Septemeber 2013, the extended maximum period of 5 years was provided for trade credits for companies in all sectors. Further, the minimum period for such credits was relaxed to 6 months for all sectors.