India - Second National Seed Project : Credit 0816 - Development Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 816 IN Development Credit Agreement (Second National Seed Project) between INDIA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated July 17, 1978 CREDIT NUMBER 816 IN DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated July 17, 1978, between INDIA, acting by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association.) WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) by five separate agreements of even date herewith between the Association and, respectively, the State of Bihar, the State of Karnataka, the State of Orissa, the State of Rajasthan and the State of Uttar Pradesh, the said States have each agreed to undertake certain obligations in respect of the carrying out of the Project; (C) by an agreement of even date herewith between the Association and Agricultural Refinance and Development Corporation (hereinafter called ARDC), ARDC has undertaken certain obligations in respect of the carrying out of the Project; and WHEREAS the Association has agreed to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the agreements referred to in Recitals (B) and (C) above; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated March 15, 1974, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1.02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions have the respective meanings therein set forth and the following additional terms have the following meanings: -2- (a) "Bihar" means the State of Bihar, a State of India, or any successor thereof; (b) "Karnataka" means the State of Karnataka, a State of India, or any successor thereof; (c) "Orissa" means the State of OrissA, a State of India, or any successor thereof; (d) "Rajasthan" means the State of Rajasthan, a State of India, or any successor thereof; (e) "Uttar Pradesh" means the State of Uttar Pradesh, a State of India, or any successor thereof; (f) "the States" means Bihar, Karnataka, Orissa, Rajasthan and Uttar Pradesh; (g) "ARDC" means Agricultural Refinance and Development Corporation, a statutory corporatin established under the laws of the Borrower; (h) "Bihar Project Agreement", "Karnataka Project Agreement", "Orissa Project Agreement", "Rajasthan Project Agreement" and "Uttar Pradesh Project Agreement" mean the respective agreements referred to in Recital (B) of this Agreement, as each such agree- ment may be amended from time to time; (i) "the State Project Agreements" means the Bihar Project Agreement, Karnataka Project Agreement, Orissa Project Agreement, Rajasthan Project Agreement and Uttar Pradesh Project Agreement, collectively and "the respective State Project Agreement" means in relation to any one of the States, the said agreement to which that State is a party; (j) "ARDC Agreement" means the agreement between the Asso- ciation and ARDC referred to in Recital (C) of this Agreement, as the same may be amended from time to time; (k "SSC" means in relation to: (i) Bihar, the Bihar Rajya Beej Nigam Limited; (ii) Karnataka, the Karnataka State Seede Corporation Limited; (iii) Orissa, the Orissa State Seeds Cor- poration Limitad; (iv) Rajasthan, the Rajasthan State Seeds Corporation Limited; and (v) Uttar Pradesh, the Uttar Pradesh State Seeds Corporation Limited; -3- (1) "NSC" means the National Seeds Corp,4 ;ion Limited, a company established under the Companies Act 1956 of the Borrower; (m) "ICAR" means Indian Council of Agricultural Research; (n) "Agricultural Universities" means (A) Rajendra Agricul- tural University at Pusa in Bihar; (B) University of Agricultural Sciences at Bangalore in Karnataka; (C) Orissa University of Agri- culture and Technology at Bhubaneswar in Orissa; (D) University of Udaipur at Udaipur in Rajasthan; and (E) Chandra Shekar Azad University of Agriculture and Technology at Kanpur and Narendra Deva Evam Prodyogik Vishwavidyalaya at Faizabad in Uttar Pradesh; (o) "Participating Bank" means any bank listed in the Second Schedule to the Reserve Bank of India Act, 1934; (p) "SFCI" means State Farms Corporation of India Limited, a company established under the Companies Act of 1956 of the Bor- rower; (q) "truthfully labelled seed" means any seed labelled as such under the Seeds Act, 1966 (No. 54 of 1966) of the Bor- rower; (r) "breeder seed" means seed of high genetic purity pro- duced by a plant breeder; (s) "foundation seed" means progeny of breeder seed or first generation foundation seed produced to statutory quality control standards; (t) "certified seed" means progeny of foundation seed produced to statutory quality control standards; (u) "CSCB" means the Central Seed Certification Board established under the Borrower's Seeds (Amendment) Act, 1972 (No. 55 of 1972); (v) "SSCA" means the Seed Certification Agency of each of the States; (w) "National Seed Agreement 1273-IN" means the Loan Agree- ment (National Seed Project) between the Borrower and the Bank dated June 10, 1976; -4- (x) "PMMC" means the Project Management and Monitoring Committee under Section 4.02 of the National Seed Agreement 1273-IN; (y) "ultimate borrowers" means borrowers of loans refinanced by Participating Banks and ARDC; (z) "National Seed Program" means a program designed by the Borrower for the systematic development of decentralized but coordinated network of seed production, processing and quality control agencies throughout India; and (aa) the sign "Rs" means rupee in the currency of India. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Borrower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equiva- lent to sixteen million dollars ($16,000,000). Section 2.02. The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Associa- tion, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. Section 2.04. The Closing Date shall be December 31, 1984 or such later date as the Association shall establish. The Asso- ciation shall promptly nc .4fy the Borrower of such later date. Section 2.05. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. -5- Section 2.06. Service charges shall be payable semiannually on May 15 and November 15 in each year. Section 2.07. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each May 15 and November 15 commencing November 15, 1988, and ending May 15, 2G8, each installment to and including the installment payable on May 15, 1998, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.08. The currency of the United Kingdom of Great Britain and Northern Ireland is hereby specified for the purposes of Section 4.02 of the General Conditions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower shall carry out, or cause to be carried out, the Project with due diligence and efficiency and in conformity with appropriate administrative, financial, agricultural and engineering practices and shall provide, promptly as needed, the funds, facilities, services and other resources for the purpose, including adequate and qualified staff. (b) Without any limitation or restriction upon any of its other obligations under this Agreement, the Borrower shall cause the States and ARDC to perform in accordance with the provisions of the State Project Agreements and the ARDC Agreement all the obligations therein set forth, shall take and cause to be taken all action, includtng the provision of funds, facilities, services and other resources, necessary or appropriate to enable the States and ARDC to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (c) Except as the Borrower and the Association shall other- wise agree, the Borrower shall make available out of the proceeds of the Credit, funds equivalent to $1,500,000 to the States, Agri- cultural Universities and NSC in accordance with the Borrower's standard arrangements for development assistance to the States of India and its agencies, to enable them to carry out the Project. -6- (d) Except as the Borrower and the Association shall other- wise agree, the Borrower shall relend out of the proceeds of the Credit, funds equivalent to $14,500,000, to ARDC under financial arrangements to be entered into between the Borrower and ARDC which shall include terms and conditions set forth in Sched- ule 4 to this Agreement, to enable ARDC to carry out Parts A, B and C of the Project. Section 3.02. In order to carry out Part H of the Project, the Borrower shall employ, or cause to be employed, by Decem- ber 31, 1978 or such later date as may be agreed by the Associa- tion, consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association. Section 3.03. (a) The Borrower shall insure or cause to be insured, or make or cause to be made adequate provision for the insurance of, the imported goods to be financed out of the pro- ceeds of the Credit against hazards incident to the acquisi- tion, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be pay- able in a currency freely usable to replace or repair such goods. (b) Except as the Association may otherwise agree, the Borrower shall cause all goods and services financed out of the proceeds of the Credit to be used exclusively for the Project. Section 3.04. The Borrower shall cause ICAR to: (i) coordi- nate and promote breeder seed production and strengthen seed technology research by the Agricultural Universities and research institutes of ICAR located in the States; and (ii) extend the responsibility of the senior ICAR official appointed under Section 4.04 of National Seed Agreement 1273-IN to cover the above tasks. Section 3.05. The Borrower shall ensure that arrangements for the overseas training program of staff under Part G of the Project shall be on terms and conditions satisfactory to the Association. Section 3.06. The Borrower shall cause NSC to enter into an agreement with each SSC, on terms and conditions satisfactory to the Association, which shall, inter alia, set out the respec- tive responsibilities of NSC and the SSC in the carrying out of the Project. The Borrower shall ensure that NSC will not assign, amend, abrogate or waive any such agreement or any provision thereof without prior consultation with the Association. Section 3.07. The Borrower shall cause NSC, ICAR and SFCI to maintain separate records adequate to reflect in accordance with consistently maintained appropriate accounting practices their respective operations and financial conditions relating to the Project. Section 3.08. The Borrower shall cause NSC and SFCI to: (i) have its accounts and financial statements for the Project for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors accept- able to the Association; (ii) furnish to the Association as soon as available, but in any case not later than six months after the end of each such year, (A) certified copies of its financial statements for such year as so audited, and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Association such other information concerning the said accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. Section 3.09. (a) The Bo:rower shall expand the membership of PVMC to include representatives of the States and extend its responsibility to monitor and coordinate the carrying out of the Project in these States. (b) The Borrower shall ensure that PMMC is provided with adequate staff support until the Closing Date. Section 3.10. The Borrower shall permit NSC to appoint such dealers in seed as NSC may consider qualified and adequate. Section 3.11. Unless otherwise agreed with the SSCs or NSC, the Borrower shall ensure that SFCI will not produce or process any seed which is also processed by such SSCs or NSC. Section 3.12. In order to carry out Part C of the Project, the Borrower shall cause SFCI to employ criteria for farm develop- ment to be agreed with the Association. Section 3.13. The Borrower shall cause NSC and SFCI to separately prepare and furnish to the Association: (a) an annual work program within two months prior to the commencement of their financial year; and -8- (b) quarterly progress reports within one month of the close of each quarter. Section 3.14. (a) The Borrower shall establish by June 30, 1979 or such later date as may be agreed by the Association, evaluation arrangements within the Ministry of Agriculture to evaluate the impact of the Project. (b) Promptly after completion of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed between the Borrower and the Associa- tion, the Borrower shall cause to be prepared and furnished to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and initial operation of the Project, its cost and the benefits derived and to be derived from it, the performance of the Borrower and its agencies, the States, ARDC and the Association of their respective obligations under this Agreement, the State Project Agreements and the ARDC Agreement and the accomplishment of the purposes of the Credit. Section 3.15. The Borrower shall review with the Association on a regular basis the level of the charges for NSC's services and shall cause such charges to be adjusted as and when necessary to enable NSC to cover its operating costs. Section 3.16. Section 3.02 of National Seed Agreement 1273-IN shall be amended as follows: "The Borrower shall employ or cause to be employed, by December 31, 1978 or such later date as the Association shall otherwise agree, consultants mentioned in Part I (2) of the Project whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Asso- ciation." Section 3.17. By March 31, 1979 or such later date as the Association shall otherwise agree, the Borrower shall cause to be prepared and furnished to the Association a seed demand analysis and demand forecast based on terms of reference mutually agreed between the Borrower and the Association. -9- ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the General Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) any of the States shall have failed to perform any of its obligations under the respective State Project Agreements; (b) ARDC shall have failed to perform any of its obligations under the ARDC Agreement; (c) an extraordinary situation shall have arisen which shall make it improbable that (i) any of the States will be able to perform its obligations under the respective State Project Agreement; or (ii) ARDC will be able to perform its obligations under the ARDC Agreement; (d) ARDC shall have become unable to pay any of its debts as they mature or any action or proceeding shall have been taken by ARDC or by others whereby any of the property of ARDC shall or may be distributed among its creditors; and (e) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablieh- ment of ARDC, NSC or any of the SSCs or for the suspension of the operations of ARDC, NSC or any of the SSCs. Section 4.02. For the purposes of Section 7.01 of the General Conditions, the following additional event6 are specified pursuant to paragraph (d) thereof: (a) any event specified in paragraph (a) or (b) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Association to the Borrower; (b) any event specified in paragraph (d) or (e) of Section 4.01 of this Agreement shall occur. - 10 - ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions: (a) the completion of arrangements satisfactory to the Association for the transfer to the SSCs of suitable processing plant and equipment of NSC; (b) the execution and delivery of the State Project Agree- ments on behalf of each of the States have been duly authorized or ratified by all necessary governmental action; (c) the execution and delivery of the ARDC Agreement on behalf or ARDC have been duly authorized or ratified by all necessary corporate action; (d) a banking plan has been prepared by ARDC under Section 2.01 of the ARDC Agreement; and (e) the Executive Chairman of NSC has been functioning in that capacity on a full-time basis. Section 5.02. The following are specified as additional matters, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association: (a) that the State Project Agreements have been duly autho- rized or ratified by, and executed and delivered on behalf of, each of the States, and each such Agreement is legally binding upon Bihar, Karnataka, Orissa, Rajasthan and Uttar Pradesh (as the case may be) in accordance with its terms; and (b) that the ARDC Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARDC, and is legally binding upon ARDC in accordance with its terms. Section 5.03. The date October 20, 1978, is hereby specified for the purposes of Section 12.04 of the General Conditions. - 11 - Section 5.04. The provisions of paragraph (b) of Section 4.02 of this Agreement shall cease and determine on the date on which this Agreement shall terminate or on a date 20 years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Director or Deputy Secretary in the Department of Economic Affairs in the Ministry of Finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: The Secretary to the Government of India Ministry of Finance Department of Economic Affairs New Delhi, India Cable address: ECOFAIRS New Delhi For the Association: Internatitial Development Association 1819 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) - 12 - IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agree- ment to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ N. A. Palkhivala Authorized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION By /s/ W. David Hopper Regional Vice President South Asia - 13 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category Dollar Equivalent) to be Financed (1) Equipment and 7,500,000 vehicles (a) directly 100% of foreign imported expenditures (b) locally manu- 100% of local factured expenditures (ex-factory) (c) locally 60% procured (2) Consultants' 500,000 100% services and overseas training (3) Civil works includ- 6,000,000 60% ing engineering (4) Farm development 500,000 60% under Parts B and C of the Project (5) Unallocated 1,500,000 TOTAL 16,000,000 -14- 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expenditures in the currency of any country other than the Borrower and for goods or services supplied from the territory of any country other than the Borrower; and (b) the term "local expenditures" means expenditures in the currency of the Borrower and for goods or services supplied from the territory of the Borrower. 3. The disbursement percentages have been calculated in com- pliance with the policy of the Association that no proceeds of the Credit shall be disbursed on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; to that end, if the amount of any such taxes levied on or in respect of any item to be financed out of the proceeds of the Credit decreases or increases, the Association may, by notice to the Borrower, increase or decrease the disbursement percentage then applicable to such item as required to be consistent with the aforementioned policy of the Association. 4. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of payments made for: (a) expenditures prior to the date of this Agreement, except that withdrawals in an aggregate amount not exceeding the equivalent of $200,000 may be made in respect of Category (1) on account of payments made for such expenditures before that date but after December 1, 1977; (b) expenditures under any Category relating to seed produc- tion and processing and seed technology research made by an Agricultural University, on a State by State basis, until that State has made available to its Agricultural University adequate land suitable for foundation seed production; (c) expenditures under Categories (1) and (3) relating to the cost of any seed processing plant until the Association has approved the design of such plant; and (d) expenditures under any Category made by a State, until the agreement between NSC and the SSC of such State has been executed under Section 3.06 of this Agreement. - 15 - 5. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 6. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expenditures for such item shall be financed out of the pro- ceeds of the Credit and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Cedit Agreement, by notice to the Borrower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financ- ing out of the proceeds of the Credit. - 16 - SCHEDULE 2 Description of the Project The Project is designed to assist the Borrower in its National Seed Program in the States of Bihar, Karnataka, Orissa, Rajasthan and Uttar Pradesh and consists of the following Parts: Part A: Establishment of one SSC in each of the States and equipping the SSCs for the production, processing, storage and marketing of certified seed. Part B: Development of farms and provision of laboratory, farm and processing equipment at Agricultural Universities for the production and processing of foundation seed. Part C: Development of 4,000 ha of SFCI's Suratgarh farm for the production of certified seed. Part D: Provision of laboratory, farm and processing equipment to the Agricultural Universities for the breeding, producing and processing of breeder seed, and support for seed technology research. Part E: Expansion of five SSCAs in Bihar, Karnataka, Orissa, Rajasthan and Uttar Pradesh, and expansion of seed testing laboratories in the States. Part F: Provision of incremental permanent working capital required by the Agricultural Universities and the SSCs, and funds to NSC for incremental reserve seed stock. Part G: Training: 1. advanced overseas training in seed technology research f,r qualified candidates from the Agricul- tural Universities; 2. training in seed processing for qualified staff of the SSCs; 3. training in seed quality control for senior staff of the SSCs and quality control agencies; and - 17 - 4. training in marketing for qualified staff including Marketing Managers and other marketing executives of the SSCs. Part H: Provision of about 28 man-months of consultants' ser- vices in seed certification, seed technology research and marketing. The Project is expected to be completed by December 31, 1983. - 18 - SCHEDULE 3 Procurement A. International Competitive Bidding 1. Except as provided in Part B hereof, contracts for the purchase of goods shall be awarded in accordance with procedures consistent with those set forth in the "Guidelines for Procurement under World Bank Loans and IDA Credits" published by the Bank in March 1977 (hereinafter called the Guidelines), on the basis of international competitive bidding as described in Part A of the Guidelines. 2. For goods to be procured on the basis of international com- petitive bidding under the Project, the Borrower shall prepare and make available to the Association as soon as possible, and in any event not later than 60 days prior to the issue of the first tender or prequalification documents relating thereto, as the case may be, a general procurement notice, in such form and detail and containing such information as the Association shall reasonably require; the Association will arrange for the publication of such notice in order to provide timely notification to prospective bidders of the opportunity to bid for the goods in question. The Borrower shall update such notice annually so long as any goods or works remain to be procured on the basis of international competi- tive bidding. B. Other Procurement Procedures 1. Contracts for equipment which cannot be bulked to $50,000 equivalent or more and contracts for vehicles shall be awarded on the basis of competitive bidding advertised locally under proce- dures satisfactory to the Association. 2. Contracts for civil works shall be awarded on the basis of competitive bidding advertised locally under procedures satis- factory to the Association. 3. Minor items of equipment and vehicles estimated to cost $10,000 equivalent or less each which must be purchased on an urgent basis may be procured by prudent shopping through normal commercial channels provided that the aggregate amount of all items so procured does not exceed $1,000,000 equivalent. - 19 - 4. Motorcycles shall be procured in accordance with the ultimate borrowers' preference. 5. Contracts for civil works and equipment for farm development under Parts B and C of the Project shall be awarded on the basis of competitive bidding advertised locally under procedures satis- factory to the Association or force account. C. Evaluation and Comparison of Bids for Goods; Preference for Domestic Manufacturers 1. For the purpose of evaluation and comparison of bids for the supply of goods except those to be procured in accordance with local procedures: (i) bidders shall be required to state in their bid the c.i.f. (port of entry) price for imported goods, or the ex-factory price for domestically-manufactured goods; (ii) customs duties and other import taxes on imported goods, and sales and similar taxes on domestically-supplied goods, shall be excluded; and (iii) the cost to the Borrower of inland freight and other expenditures incidental to the delivery of goods to the place of their use or installation shall be included. 2. Goods manufactured in India may be granted a margin of preference in accordance with, and subject to, the following provisions: (a) All bidding documents for the procurement of goods shall clearly indicate any preference which will be granted, the information required to establish the eligibility of a bid for such preference and the following methods and stages that will be followed in the evaluation and comparison of bids. (b) After evaluation, responsive bids will be classified in one of the following three groups: (1) Group A: bids offering goods manufactured in India if the bidder shall have established to the satisfaction of the Borrower and the Association that the manufacturing cost of such goods includes a value added in India equal to at least 20% of the ex-factory bid price of such goods. (2) Group B: all other bids offering goods manufactured in India. (3) Group C: bids offering any other goods. - 20 - (c) All evaluated bids in each group shall be first compared among themselves, excluding any customs duties and other import taxes on goods to be imported and any sales or similar taxes on goods to be supplied domestically, to determine the lowest evaluated bid of each group. Such lowest evaluated bids shall then be compared with each other, and if, as a result of this comparison, a bid from group A or group B is the lowest, it shall be selected for the award. (d) If, as a result of the comparison under paragraph (c) above, the lowest bid is a bid from group C, all group C bids shall be further compared with the lowest evaluated bid from group A after adding to the c.i.f. bid price of the imported goods offered in each group C bid, for the purpose of this further comparison only, an amount equal to (i) the amount of customs duties and other import taxes which a non-exempt importer would have to pay for the importation of the goods offered in such group C bid; or (ii) 15% of the c.i.f. bid price of such goods if said customs duties and taxes exceed 15% of such price. If the group A bid in such further comparison is the lowest, it shall be selected for the award; if not, the bid from group C which as a result of the comparison under paragraph (c) is the lowest evaluated bid shall be selected. D. Review of Procurement Decisions by the Association 1. With respect to all contracts for goods and civil works estimated to cost the equivalent of $300,000 or more: (a) Before bids are invited, the Borrower shall furnish to the Association, for its comments, the text of the invita- tions to bid and the specifications and other bidding documents, together with a description of the advertising procedures to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association shall reasonably request. Any further modification to the bidding documents shall require the Association's concurrence before it is issued to the prospective bidders. (b) After bids have been received and evaluated, the Bor- rower shall, before a final decision on the award is made, inform the Association of the name of the bidder to which it intends to award the contract and shall furnish to the Association, in suffi- cient time for its review, a detailed report on the evaluation and comparison of the bids received, and such other information as - 21 - the Association shall reasonably request. The Association shall, if it determines that the intended award would be inconsistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. (c) The terms and conditions of the contract shall not, without the Association's concurrence, materially differ from those on which bids were asked. (d) Two conformed copies of the contract shall be furnished to the Association promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract. 2. With respect to each contract to be financed out of the proceeds of the Credit and not governed by the preceding para- graph, the Borrower shall furnish to the Association, promptly after its execution and prior to the submission to the Association of the first application for withdrawal of funds from the Credit Account in respect of such contract, two conformed copies of such contract, together with the analysis of the respective bids, recommendations for award and such other information as the Association shall reasonably request. The Association shall, if it determines that the award of the contract was not consistent with the Guidelines or this Schedule, promptly inform the Borrower and state the reasons for such determination. - 22 - SCREDULE 4 Principal Lending Terms and Conditions 1. Borrower to ARDC (a) For ARDC refinancing up to 9 years: (i) annual interest rate of 6.75%, less 0.25% for prompt payment; and (ii) repayment at the end of 9 years. (b) For ARDC refinancing for more than 9 and up to 15 (i) annual interest rate of 7.25%, less 0.25% for prompt panment; and (ii) repayment at the end of 15 years. (c) Borrower to carry exchange risk. 2. ARDC to Participating Bank (a) Annual interest rate of 8%. (b) Installment repayments to coincide approximately with collections from ultimate borrowers. (c) ARDC to refinance Participating Bank by loans not exceeding 90% of individual loans. 3. Participating Bank to Ultimate Borrowers (a) Annual interest rate of 11%. (b) A once and for all evaluation fee of 0.5% of the cost of project investments may be charged. (c) Repayment periods to be based on the ultimate borrowers' repayment capacity, but not to exceed 15 years. - 23 - (d) Grace periods for repayment of principaA not exceeding 5 years from the date of disbursement of the loans may be granted at the discretion of ARDC provided that the repayment period of such loans is not exceeded. (e) Participating Bank to finance the SSCs and SFCI by loans not exceeding 70% and the Agricultural Universities by loans not exceeding 75% of their investment. 4. General (a) ARDC and Participating Bank to maintain separate accounts for the above lending. (b) Conditions for lending to SFCI: (i) SFCI to furnish to ARDC and Participating Bank detailed farm planning proposals including soil, topographical and groundwater survey, farm mechani- zation and land development plans. The minimum financial rate of return for each plan shall be 20% with suitable cash flow. (ii) Security to be in accordance with arrangements between Participating Bank and ARDC. (iii) The Borrower to guarantee the repayment of princi- pal and interest upon Participating Bank's request. (c) Condititions for lending to the SSCs: (i) the SSCs to furnish to ARDC and Participating Bank detailed investment proposals including the techni- cal review and plant design by NSC, cash flow and financial position. (ii) Security to be in accordance with arrangements between Participating Bank and ARDC.