(i) Each country may provide a proposal indicating the projects/goods and services that it would be interested in importing from India in line with its national priorities to the concerned Mission.

• In case of projects, the Detailed Project Report (DPR) should be made available for appraisal before according approvals for the LOC.
• In case the country is unable to prepare a DPR on its own, it should provide as many details as possible through a Project Outline, Feasibility Study etc. to enable consideration of LOC approval. In such cases, LOC may be approved with the condition that an amount not exceeding 1% of the LOC will be utilised first for preparation of the DPR and updation/appraisal thereof. Further utilisation of the LOC will be subject to the DPR appraisal, findings and approval thereof.
• An amount up to 0.50% of the LOC can be utilised for evaluation of the project on completion, by the Lending Bank or an independent agency appointed by it, as mentioned under clause 11(iii) of the Scheme.
• In the case of goods and services exports, details regarding the products/nature of service, the quantity required and the estimated cost are to be indicated.

(ii) Government of India's priorities would broadly be as follows:

• The first priority would be to fund economic and infrastructural projects in borrowing countries.
• The second priority will be to exports in specific sectors to create bridgeheads for bilateral trade.
• The third priority would be export of goods and services required in the markets of borrowing country in which India does not have a presence.
• Support by way of credit lines for setting up adequate network of servicing facilities by exporters

(iii) Regional proposals submitted jointly by two or more countries may also be considered. In this case, details regarding the implementing agency, and share of each country in the total credit envisaged, has to be indicated. The concerned Missions should be fully apprised of the proposal and needs to support the project.

(iv) Apart from sovereign guarantee to be provided by the Borrowing Government to cover repayment of interest and principal, providing additional comfort through re-insurance, securitizing the loans, finding third party guarantees /escrow accounts, lin age with exports of commodities etc., may also be explored and included in the proposal.

(v) MEA shall, after receipt of due appraisal and assessment of the project/DPR conducted by the Lending Bank or an independent agency employed by it, or entrusted by MEA to the line Ministry or their agencies, convene a meeting of the Standing Committee comprising officers of MEA, DEA, Lending Bank(s) and other stakeholders as special invitees (as considered necessary by the Committee) who would examine the proposal for grant of LOC in detail and would make its recommendations. Costs, if any, for appraisal and assessment of project / DPR shall be covered under the LOC earmarked for the purposes under clause A(i)(b) of the Operational Guidelines.

(vi) Commitments made on the occasion of high-level visits or Summits/Ministerial meetings for extending support through LOC to any country may be treated as "in principle" approvals. In such cases and with a view to early fulfilment of commitments made at the political level, the concerned Indian Mission and Borrowing Government would be expected to work closely to develop proposals and Detailed Project Reports (DPR) for further processing of the case.

(vii) The final decision regarding the quantum and terms and conditions of the LOC will rest with the Government of India. The Standing Committee shall also meet and deliberate upon the revision of terms and conditions of LOCs granted on the specific request of a Borrowing Government depending upon individual circumstances and all other matters relating to LOCs etc.

While preparing the DPR, the following guidelines shall be observed:

• A detailed cost break-up along with detailed justification under each head.
• Identification of the land for the proposed project, as also, details of access/right of way to the site.
• Availability of basic resources viz. water and electricity etc
• Availability and continuous supply of raw material post commissioning in close proximity of the site
• Commitment from various Ministries of the host country for implementation of the project, such as tax exoneration, allotment of land, environmental clearances, security to Indian personnel, clearance of goods from the port authorities and its transportation to the site.
• The DPR would need to evaluate the technical and financial sustainability plan of the proposed project, the developmental benefits arising from the project and the capability of the host Government to ensure smooth handling of the project post implementation.
• The DPR may also specify the financial contribution (if any) of the Borrower government and how it is proposed to be met.
• The DPR should not be more than twelve months old prior to the approval of LOC to ensure that there are no major deviations from the assumptions of the DPR.
• Major deviations, if any, in DPR viz. change of site/ location, scope of the project and other commercial terms may be considered prior to the approval of Gol.
• The currency of the DPR should be uniform with the contract (preferably in USD).

• Information on projects sought to be undertaken through LOC financing will be displayed on the website of the Lending Bank and also disseminated by it to industry associations to give wide publicity. Borrowing Governments should be encouraged to do the same.
• Borrowing Government shall forward the scope of the project and pre­ qualification criteria to the Lending Bank which will invite Expression of Interest from Indian companies / entities and undertake a pre-qualification exercise for each project at its cost. The list of pre-qualified companies/entities will be provided to the Borrowing Government. Thereafter, the project will be put to bid under a competitive bidding process by the Borrowing Government or its agency. For bidding process under the LOCs, eligibility of participation shall comply with extant Gol rules and is limited to Indian entities registered in India and/or incorporated/established under any law in force in India. However, such an entity if blacklisted by any multilateral development bank, such as World Bank, Asian Development Bank, or any authority of Gol or the Borrowing Government will not be eligible to participate for the period it is blacklisted.
• Complete transparency and fairness in the award of contracts by Borrowing Governments to Indian companies under LOC financing is extremely critical. Borrowing Governments and their nominated agencies are expected to conduct transparent and fair bidding process which should be clearly defined and details of which should be provided to Lending Bank in advance. They are also required to advise Lending Bank about the procedure followed for evaluation and selection of Indian contractors/suppliers, details of all bids received, etc.
• Should there be any deviation from this procedure, the Borrowing Government/Agency must provide detailed justification for the same to the Lending Bank, which, in turn, will seek the decision of Ministry of External Affairs and DEA, Government of India, regarding the approval of such contracts.
• Indian Missions must remain vigilant to ensure transparency and due scrutiny in the award of contracts by the Borrowing Government.
• Bid price should be expressed in US dollars only.

• Tender documents will need to be complete in all aspects. Payment terms are required to be linked to milestone achievements under the project. The Lending Bank may restrict the advance payment up to 20% of the contract value. 10% of the contract value should be retained and disbursed only after the installation and commissioning of equipment supplied under the project. Payment terms shall include liquidated damages in the range of 1-5% of the contract value for delays.
• Full set of tender documents will be forwarded to Gol and Lending Bank by the LOC Borrowing Government prior to the start of the tender process. The Lending Bank will have the same vetted by an independent consultant to ensure that all tender conditions are relevant and not restrictive in nature so as to ensure greater participation from Indian companies. The Lending Bank will propose changes to the tender documents, if required to be made. Final approval of the tender documents will be made by the Lending Bank.
• The Borrowing Government will undertake the tender process with the prequalified contractors / consultants.
• The Borrowing Government may also arrange to make available the tender documents on line and/or through Mission in India for purchase by potential Indian bidders.

• Based on the bids submitted by Indian companies, the Borrowing Government/Agency shall award the contract in accordance with fair and transparent evaluation criteria and procedures. The Lending Bank would reserve the right to keep in abeyance all contracts that are violative of the norms of the transparency and fair competition.
• After the bidding process, the Borrower will submit a copy of the draft contract and the Bid Evaluation Report to the Lending Bank for its concurrence. Lending Bank shall analyse the Bid Evaluation Report to ensure that the contract is being awarded in a fair and transparent manner.
• The Borrowing Government shall draft the contract with scope of works and price and payment schedules on lines similar to the DPR and the tender documents. Under the broad expenditure heads generally stated in DPR, the contract should include suitable sub-headings of the expenditure to define the costs more precisely. Payments shall be made on the basis of Payment Authorisation issued by Borrowing Government. Contract-wise Letters of Credit may be opened. The contracts should include provisions of suitable Bank Guarantees. Any deviation in the contract vis-a-vis DPR and the tender documents should be supported with detailed justifications for such deviations.
• The Lending Bank shall analyse the draft contract to ensure that the same is in line with the DPR and the tender documents. In case of any discrepancy, the same will be referred to the Government of India after obtaining clarifications from the Borrowing Government on the same. Based on Gol's instructions, if any, Lending Bank shall convey its decision to the Borrowing Government.
• All confirmations regarding the availability of land, right of way, basic resources, clearances, tax and duty exemptions, financial closure and other commitments from the Borrowing Government should be forwarded along with the contract or prior to the release of advance payment.
• Based on the experience of handling complex projects as also based on the opinion of domain experts on various projects, Lending Bank may, if required, submit its inputs to the Borrowing Government on how to draft contracts. Terms and conditions of International Federation of Consulting Engineers (FIDIC) guidelines may be considered while drafting such contracts. Lending Bank may also seek the assistance of domain experts for the drafting of the technical parameters under the contract. The cost of such services of domain experts may form a part of each LOC.

• An independent Indian Project Management Consultant (PMC) should be appointed for all projects of USD 10 million and above through fair and transparent bidding. For projects of less than USD 10 million or for supply projects, PMC may be appointed, if required, on case-to-case basis, including for preparation of DPR, if necessary. If the PMC is appointed by the Borrower Government on its own, the PMC charges have to be borne by LOC borrower. However, these conditions can be considered for relaxation on the request of the Borrowing Government supported by detailed justifications.
• If the Borrowing Government requests MEA or the Lending Bank to appoint an Indian PMC on its behalf, MEA may do so based on extant Gol rules and procedures.
• The PMC scope of work should cover the design, bidding (including preparation of tender documents and evaluation of bids), monitoring of implementation (including certification of invoices and Indian content), evaluation of operations and maintenance, and post-commissioning stages of a project, inter alia including confirmation on asset quality.
• The Borrowing Government can also appoint a Consultant of international repute as per their need/policy. However, in such a case the costs of the Consultant will be borne by the Borrowing Government.

Borrowing Government shall enter into a Comprehensive Maintenance Contract (CMC) for 3-5 years, after commissioning of the project and completion of the warranty period. The cost of the CMC with spares, where necessary, should be quoted by the Indian entities bidding for the execution contracts as part of their total cost in the bid documents submitted by them. The Borrowing Government can also award CMC to local contractors as per their need/policy. However, in such cases, the CMC costs will be borne by the Borrowing Government.