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SPECIFIC POLICY FOR SUPPLY CONTRACTS

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SPECIFIC POLICY FOR SUPPLY CONTRACTS

The Standard Policy is a whole turnover policy designed to provide a continuing insurance for the regular flow of an exporter’s shipments for which credit period does not exceed 180 days.

Contracts for export of capital goods or turnkey projects or construction works or rendering services abroad are not of a repetitive nature and they involve medium/long-term credits.

Such transactions are, therefore, insured by ECGC on a case-to-case basis under Specific Contract Policies.

Formalities to be completed before applying for specific policies for contracts

All contracts for export on deferred payment terms and contracts for turnkey projects and construction works abroad require prior clearance of Authorized Dealers, EXIM Bank or the Working Group in terms of powers delegated to them as per exchange control regulations.

Applications for the purpose are to be submitted to the Authorized Dealer (the financing bank), which will forward applications beyond its delegated powers to the EXIM Bank.

Proposals for Specific Policy are to be made to ECGC after the contract has been cleared by the Authorized Dealer, EXIM Bank or the Working Group, as the case may be.

Risk Covered:

Commercial

Insolvency of buyer

Protracted default of buyer

Buyer’s failure to accept goods

Political

War, Civil War, Revolutions in buyer’s country

New Import restrictions

Transfer delays

L/C Opening Bank Risks

Insolvency

Default

Loss Coverage: 90%

Important Obligations:

Obtain indicative premium rate at bid stage
Seek post awarded approval from AD/WG on award of contract
Obtain in-principle approval
Seek cover after payment of premium
Advise progress of project in accordance with PEM guidelines
Declaration of overdue payments
Filing of claim within 12 months from due date
Sharing of recovery

Highlights:

Cover can be either for political or comprehensive risks
Add on pre-shipment risk cover can also be obtained
Cover for full insurable value including retention portion
Cover for third country exports as well
Premium can be paid in installments

Reduced premium for projects funded by Multi-lateral agencies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Hope the information will assist you in your Professional endeavors. For query or help, contact: singh@carajput.com or call at 9555555480

Tags: Buyer’s failure to accept goodsexchange control regulations.Insolvency of buyerPEM guidelinesProtracted default of buyerSpecific Contract Policies.

11 years ago

Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.