India - Haryana Agricultural Credit Project : Credit 0249 - Credit Agreement - Conformed

CONFORMED COPY CREDIT NUMBER 249-IN Development Credit Agreement (Haryana Agricultural Credit Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 11, 1971 CONFORMED COPY CREDIT NUMBER 249-IN Development Credit Agreement (Haryana Agricultural Credit Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED JUNE 11, 1971 AGREEMENT, dated June 11, 1971, between INDIA, act- ing by its President (hereinafter called the Borrower) and INTERNATIONAL DEVELOPMENT AssOcIATION (hereinafter called the Association). WHEREAS (A) The Borrower has requested the Associa- tion to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; (B) By an agreement of even date herewith between the Association and the State of Haryana, the State of Hary.. has agreed to undertake certain obligations in respect of the carrying out of the Project; (C) By an agreement of even date herewith among the Association, Agricultural Refinance Corporation, the Har- yana State Co-operative Land Mortgage Bank Limited, and The Haryana Agro-Industries Corporation Limited, certain obligations in respect of the carrying out of the Project have been undertaken by Agricultural Refinance Corpora- tion, the Haryana State Co-operative Land Mortgage Bank Limited and The Haryana Agro-Industries Corporation Limited; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth. Now THEREFORE the p'arties 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 4 Development Credit Agreements of the Association, dated January 31, 1969, with the same force and effect as if they were fully set forth herein, subject, howover, to the follow- ing modifications thereof (said General Conditions Appli- cable to Development Credit Agreements of the Associa- tion, as so modified, being hereinafter called the General Conditions) : (a) Section 5.01 is deleted; (b) Section 6.02 (h) is deleted and Section 6.02 (i) be- comes 6.02 (h); (c) Paragraph 5 of Section 2.01 is amended to read as follows: "5. The term 'Borrower' means India, acting by its President."; (d) The following paragraph is added to Section 2.01: "13. The terms 'Project Agreement' and 'Haryana Agree- ment' have the meaning set forth in the Development Credit Agreement."; (e) The words ", the Project Agreement and the Har- yana Agreement" are added after the words "the Devel- opment Credit Agreement" in Section 6.06. 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 there- in set forth and the following additional terms have the following meanings: (a) "Haryana" means the State of Haryana, a state of India, or any successor thereof. (b) "ARC" means Agricultural Refinance Corporation, a statutory corporation established and organized under the laws of the Borrower. (c) "LMB" means the Haryana State Co-operative Land Mortgage Bank Limited, a cooperative society established and organized under the laws of Haryana. (d) "HAIC" means The Haryana Agro-Industries Cor- poration Limited, a corporation established and organized under the laws of the Borrower. (e) "Project Agreement" means the agreement of even date herewith between the Association, ARC, LMB and HAIC, and all Schedules thereto, as the same may be amended from time to time. (f) "Haryana Agreement" means the agreement of even date herewith between Haryana and the Association, as the same may be amended from time to time. (g) "Subsidiary Loan Agreement" means the agreement to be entered into between the Borrower and ARC pursu- ant to Section 3.01 (d) of this Agreement, and all Schedules thereto, if any, as the same may be amended from time to time with the approval of the Association. (h) "Agricultural Loan" means any loan made or pro- posed to be made to a Beneficiary and to be financed out of the proceeds of the Credit. (i) "Beneficiary" means (i) any person or enterprise carrying out farm custom work in the territory of Haryana, or (ii) any farmer, group of farmers or cooperative so- c" ty, carrying out farm work in the territory of Haryana which is eligible to receive an Agricultural Loan. (j) "Participating Bank" means any bank, listed in the Second Schedule to the Reserve Bank of India Act, 1934, which has entered into an agreement with ARC in accord- ance with Section 2.02(c) of the Project Agreement. (k) "Primary Bank" means any Primary Land Mort- gage Bank which is a member of LMB and which has entered into an agreement with LMB in accordance with Section 2.03 of the Project Agreement. 6 ARTICLE II The Credit SECTION 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions in the Development Credit Agreement set forth or referred to, an amount in various currencies equivalent to twenty-five million dollars ($25,000,000). SECTION 2.02. The amount of the Credit may be with- drawn from the Credit Account in accordance with the pro- visions of Schedule 1 to this Agreement, as such Schedule shall be amended from time to time, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services re- quired for the Project and to be financed under the Devel- opment Credit Agreement; provided, however, that, except as the Association shall otherwise agree, no withdrawal shall be made on account of expenditures in the territories of any country which is not a member of the Bank (other than Switzerland) or for goods produced in, or services supplied from, such territories. SECTION 2.03. The Closing Date shall be March 31, 1975 or such other date as shall be agreed between the Borrower and the Association. SECTION 2.04. The Borrower shall pay to the Associa- tion a service charge at the rate of three-fourths of one per cent (3/4 of 17) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. SECTION 2.05. Service charges shall be payable semi- annually on March 1 and September 1 in each year. SECTION 2.06. The Borrower shall repay the principal amount of the Credit in semi-annual installments payable on each March 1 and September 1 commencing September 1, 1981 and ending March 1, 2021, each installment to and 7 including the installment payable on March 1, 1991 to be one-half of one per cent ( of 1%) of such principal amount, and each installment thereafter to be one ane one- half per cent (12%o) of such principal amount. SECTION 2.07. 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 sound administrative, agri- cultural and financial practices, and shall provide, promptly as needed, the funds, facilities, services and other resources required for the purpose. (b) Without limitation or restriction upon any of the obligations of the Borrower set forth in paragraph (a) of this Section, the Borrower shall take all action including, in particular, without reconsideration. of the eligibility of the items for importation, the granting of all necessary licenses, foreign exchange permits and other approvals re- quired to ensure the prompt importation of the following: (i) that part of the equipment listed in paragraphs 1 and 3 of Schedule 4 to this Agreement that may be procured from outside the territories of the Bor- rower in accordance with the provisions contained in Schedule 3 to this agreement; (ii) initial spare parts for the tractors and harvesting machinery imported under the Project in an amount equal to 15% of the c.i.f. price thereof; and (iii) for a period of four years commencing three years after the disbursement date in respect of each con- signment of tractors or harvesting machinery fi- nanced under the Credit, spare parts for such equip- 8 ment in an annual amount equal to 10o of the c.i.f. price of tractors and harvesting machinery imported pursuat to subparagraph (i) hereof or such lesser amount as may from time to time be agreed to be- tween the Borrower and the Association. (c) The Borrower shall notify the Association of the firms eligible to bid for tractors pursuant to paragraph 1(a) of Schedule 3 to this Agreement, at the time of each invitation to bid. (d) The Borrower shall enter into a Subsidiary Loan Agreement on terms and conditions (including inter alia those set forth in Schedule 5 to this Agreement) satisfac- tory to the Association for the purpose of relending to ARC for relending to LMB and Participating Banks the equivalent of the proceeds of the Credit, including the counterpart funds generated by the sale of initial spare parts to dealers. The Borrower shall exercise its rights under the Subsidiary Loan Agreement in such manner as to protect the interests of the Borrower and the Association and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not assign, amend, abrogate or waive the Subsidiary Loan Agreement or any proviC!on thereof. (e) The operating policies and procedures for the carry- ing out of the Project shall be as set forth in Schedule 1 to the Project Agreement. SECTON 3.02. The Borrower shall take and shall cause all its agencies to take all action which shall be necessary on their part to enable (i) Haryana to perform all its obligations under the Haryana Agreement, and (ii) ARC, LMB and HAIC to perform their obligations under the Project Agreement, and shall not take or permit any of its agencies to take any action which would prevent or in- terfere with the performance of any such obligations of Haryana, ARC, LMB or HAIC. SECTION 3.03. (a) The Borrower shall insure, or cause to be insured, 'or make, or cause to be made, adequate pro- 9 vision for the insurance of the imported goods to be financed out of the proceeds of the Credit against hazards incident to the acquisition, transportation and delivery thereof to the place of use, and for such insurance any indemnity shall be payable in a currency freely usable by the Borrower to replace or repair such goods. The Bor- rower shall keep the Association informed of such insur- ance arrangements. (b) Except as the Association shall 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. Except as the Association shall otherwise agree, the goods and services to be financed out of the pro- ceeds of the Credit under Categories II, III and IV of the allocation of the proceeds of the Credit set forth in Sched- ule 1 to this Agreement shall be procured in accordance with the provisions set forth in Schedule 3 to this Agree- ment. SECTION 3.05. The Borrower shall cause the tractor im- plements described in paragraph 2 of Schedule 4 to this Agreement to be made available to Beneficaries in suffi- cient quantities and in time for the proper execution of the Project; and shall cause sufficient hard steel of the proper quality to be made available for use in manufactur- ing the necessary plough bottoms, discs and springs. ARTICLE IV Other Covenants SECTION 4.01. (a) The Borrower shall cause ARC and LMB to maintain records adequate to reflect in accordance with consistently maintained sound accounting practices their operations and financial condition. (b) The Borrower shall cause ARC and LMB to: (i) es- tablish and maintain separate accounts in respect of all 10 funds disbursed and received on account of the Project; (ii) have their accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each fiscal year audited, in accordance with sound auditing principles consistently applied, by inde- pendent auditors acceptable to the Association; (iii) fur- nish to the Association as soon as available, but in any case not later than four months after the end of each such year, (A) certified copies of their 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 Asso- ciation shall have reasonably requested; and (iv) furnish to the Association such other information concerning their accounts and financial statements and the audit thereof as the Association shall from time to time reasonably request. ARTICLE V Consultation, Information and Inspection SECTION 5.01. The Borrower and the Association shall cooperate fully to assure that the purposes of the Credit will be accomplished. To that end, the Borrower and the Association shall from time to time, at the request of either party: (a) exchange views through their representatives with regard to the performance of their respective obligations under the Development Credit Agreement, the performance by Haryana of its obligations under the Haryana Agree- ment, the performance by ARC, LMB and HAIC of their obligations under the Project Agreement, the administra- tion, operations and financial condition of ARC, LMB and HAIC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof, and other matters relating to the purposes,of the Credit; and (b) furnish to the other all such information as it shall reasonably request with regard to the general status of the Credit. On the part of the Borrower, such information 11 shall include information with respect to financial and economic conditions in the territories of the Borrower, in- cluding its balance of payments, and the external debt of the Borrower, of any of its political subdivisions and of any agency of the Borrower or of any such political sub- division. SECTION 5.02. (a) The Borrower shall furnish or cause to be furnished to the Association all such information as the Association shall reasonably requcst concerning the operations and financial condition of ARC, LMB and HAIC and, in respect of the Project, of the departments or agencies of the Borrower responsible for carrying out the Project or any part thereof. (b) The Borrower and the Association shall promptly inform each other of any condition which interferes with, or threatens to interfere with, the accomplishment of the purposes of the Credit, the maintenance of the service thereof, the performance by either of them of its obliga- tions under the Development Credit A.greement, the per- formance by Haryana of its obligations under the Haryana Agreement, the performance by ARC of its obligations under the Project Agreement and the Subsidiary Loan Agreement, or the performance by LMB and HAIC of their respective obligations under the Project Agreement. SECTION 5.03. The Borrower shall afford all reasonable opportunity for accredited representatives of the Associa- tion to visit any part of the territories of the Borrower for purposes related to the Credit. ARTICLE VI Taxes and Restrictions SECTION 6.01. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes imposed. under the laws of the Borrower or laws in,effect in its territories. 12 SECTION 6.02. The Development Credit Agreement, the Haryana Agreement and the Project Agreement shall be free from any taxes on or in connection with the execution, delivery or registration thereof, imposed under the laws of the Borrower or laws in effect in its territories. SECTION 6.03. The payment of the principal of, and serv- ice charges on, the Credit shall be free from all restrictions, regulations, controls and moratoria of any nature imposed under the laws of the Borrower or laws in effect in its territories. ARTICLE VII Remedies of the Association SECTION 7.01. If any event specified in Section 7.01 of the General Conditions or in Section 7.03 of this Agreement shall occur and shall continue for the period, if any, therein set forth, then at any subsequent time during the continu- ance thereof, the Association, at its option, may by notice to the Borrower declare the principal of the Credit then outstanding to be due and payable immediately together with the service charges thereon and upon any -such declara- tion such principal and service charges shall become due and payable immediately, anything to the contrary in the Development Credit Agreement notwithstanding. SECTION 7.02. For the purposes of Section 6.02 of the General Conditions, the following additional events are specified: (a) Haryana shall have failed to perform any of its obligations under the Haryana Agreement; ARC, LMB or HAIC shall have failed to perform any of their respective obligations under the Project Agreement; or ARC shall have failed to perform any of its obligations under the Subsidiary Loan Agreement. (b) An extraordinary situation shall have arisen which shall make it improbable that (i) Haryana will be able to 13 perform its obligations under the Haryana Agreement, or (ii) ARC, LMB or HAIC will be able to perform their respective obligations under the Project Agreement, or (iii) ARC will be able to perform its obligations under the Subsidiary Loan Agreement. SECTION 7.03. For the purposes of Section 7.01 of the General Conditions, the following additional events are specified: (a) Any event specified in Section 7.02 of this Agree- ment shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Asso- ciation to the Borrower and the defaulting party. (b) ARC, LMB or HAIC shall have become unable to pay any of their debts as they mature or any action or pro- ceeding shall have been taken by ARC, LMB or HAIC or by others whereby any of the property of ARC, LMB or HAIC shall or may be distributed among its creditors. (c) The Borrower or any other authority having juris- diction shall have taken any action for the dissolution or disestablishment of ARC, LMB or HAIC or for the sus- pension of their operation. ARTICLE VIII Effective Date; Termination SECTION 8.01. The following events are specified as ad- ditional conditions to the effectiveness of the Development Credit Agreement within the meaning of Section 10.01 (b) of the General Conditions: (a) The execution and delivery of the Haryana Agree- ment on behalf of Haryana have been duly authorized or ratified by all necessary governmental action. (b) The execution and delivery of the Project Agreement on behalf of ARC, LMB and HAIC, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. 14 (c) The execution and delivery of the Subsidiary Loan Agreement on behalf of the Borrower and ARC, respec- tively, have been duly authorized or ratified by all neces- sary corporate and governmental action. (d) The execution and delivery of the Agreement be- tween ARC and LMB which is referred to in Section 2.02 (c) of the Project Agreement, on behalf of ARC and LMB, respectively, have been duly authorized or ratified by all necessary corporate and governmental action. (e) LMB shall have appointed an agricultural economist and a chief inspecting officer, who, together with the two inspecting officers already at post, shall be responsible for the overall guidance, control, and training of land valua- tion officers. SECTION 8.02. The following are specified as additional matters, within the meaning of Section 10.02 (b) 'of the General Conditions, to be included in the opinion or opin- ions to be furnished to the Association: (a) that the Haryana Agreement has been duly author- ized or ratified by, and executed and delivered on behalf of, Haryana and constitutes a valid and binding obligation of Haryana in accordance with its terms; (b) that the Project Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, ARC, LMB and HAIC respectively, and constitutes a valid and binding obligation of ARC, LMB and HAIC in ac- cordance with its terms; (c) that the Subsidiary Loan Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, the Borrower and ARC respectively, and con- stitutes a valid and binding obligation of the Borrower and ARC in accordance with its terms; and (d) that the agreement between ARC and LMB which is referred to in Section 2.02(c) of the Project Agreement 15 has been duly authorized or ratified by, and executed and delivered on behalf of, ARC and LMB, and constitutes a valid and binding obligation of ARC and LMB in accord- ance with its terms. SECTION 8.03. The date September 30, 1971 is hereby specified for the purposes of Section 10.04 of the General Conditions. SECTION 8.04. On termination of the Project Agreement in accordance with its terms, the obligations of the Bor- rower with respect to the Project shall forthwith terminate. ARTICLE IX Representative of the Borrower; Addresses SECTION 9.01. Any Secretary, Additional Secretary or Joint Secretary to the Government of India in the Ministry of Finance of the Borrower or the Director of the Depart- ment of Economic Affairs in the Ministry of Finance of the Borrower, acting singly, is designated as representa- *ve of the Borrower for the purposes of Section 9.03 of the General Conditions. SECTION 9.02. The following addresses are specified for the purposes of Section 9.01 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: Ecof airs New Delhi 16 For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Indevas Washington, D.C. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names and to be delivered in the District of Columbia, United States of America, as of the day and year first above written. INDIA By /s/ L. K. JHA Authorized Representative INTERNATIONAL DEVELOPMENT AssoCIATION By /s/ J. BURKE KNAPP Vice President 17 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 amounts of the Credit to each category and the per- centage of eligible expenditures so to be financed in each category: Amount of the Credit Allocated (Expressed in % of Expenditures Category Dollar Equivalent) to be Financed I. Loans for minor 4,400,000 46% of loans disbursed irrigation by LMB and Participat- ing Banks for minor irrigation II. Imported tractors 17,400,000 100% of foreign expen- ditures III. Self-propelled combines 500,000 100% of total expendi- and tractor-drawn tures harvesters IV. Initial spare parts 2,700,000 for A. Tractors 100% of foreign expen- ditures B. Self-propelled 100% of total expendi- combines tures C. Tractor-drawn 100% of total expendi- harvesters tures TOTAL 25,000,000 2. For the purposes of this Schedule: (a) the term "foreign expenditures" means expendi- tures for goods produced in, or services supplied from, the 18 territories, and in the currency, of any country other than the Borrower; (b) the term "local expenditures" means expenditures in ithe currency of the Borrower, or for goods produced in, or services supplied from, the territories of the Borrower; and (c) the term "total expenditures" means the aggregate of foreign and local expenditures. 3. Notwithstanding the provisions of paragraph I above, no withdrawals shall be made in respect of : (a) expenditures prior to the date of this Agreement; (b) payments for taxes imposed under the laws of the Borrower or laws in effect in its territories on goods or services, or on the importatioin, manufacture, procurement or supply thereof. To the extent that the amount repre- sented by the percentage set forth in the third column of the table in paragraph 1 above in respect of any Category would exceed the amount payable not of all such taxes, such percentage shall be reduced to ensure that no proceeds of the Credit will be withdrawn on account of payments for such taxes; and (c) expenditures for freight and insurance within the territories of the Borrower with respect to goods financed pursuant to Categories III and IV (B) and (C). 4. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in para- graph 1 above, if the estimate of the expenditures under Category II, III or IV shall decrease, the amount of the Credit then allocated to such Category and no longer re- quired therefor will be reallocated by the Association (sub- ject, however, to the requirements for contingencies, as determined by the Association, in respect of any other Cate- gories) by increasing correspondingly the amount allocated 19 to Category I and the Association may, at the request of the Borrower, increase correspondingly (up to a maximum of 100% net of taxes) the percentage applicable to Cate- gory I. 5. Notwithstanding the percentages set forth in the third column of the table in paragraph 1 above or the provisions of paragraph 4 above, if the estimate of total expenditures under Category I shall increase and no proceeds of the Credit are available for reallocation to that Category, the Association may, by notice to the Borrower, adjust the percentage then applicable to such expenditures in order that further withdrawals under such Category may con- tinue until all expenditures thereunder shall have been made. 6. Notwithstanding the allocation of an amount of the Credit set forth in the second column of the table in para- graph 1 above, if any contract for the procurement of any item included in Categories II through IV shall have been awarded according to procedures inconsistent with those set forth or referred to in Schedule 3 of this Agreement, or if the Association shall have reasonably objected to any such contract on the ground that the procurement procedure fol- lowed is inconsistent with the procedures set forth or referred to in such Schedule 3 or if the terms and condi- tions of any such contract shall, without the Association's prior concurrence, materially differ from those on the basis of which bids were asked, the Association may, by notice to the Borrower, cancel such amount of the Credit and correspondingly reduce the amount allocated to the relevant Category, as the Association shall reasonably determine to represent the portion of the expenditures under such con- tract which would have been eligible for financing out of the proceeds of the Credit, had the procurement procedures followed not been inconsistent with those set forth or referred to in such!Schedule. 20 SCHEDULE 2 Description of the Project The Project, which is part of a lending program for agri- cultural development in Haryana, consists of : A. A three year program to finance investments in minor irrigation (tube wells and sprinkler irrigation) and farm mechanization for Beneficiaries granted by Primary Banks and Participating Banks, which loans will be refinanced in accordance with the terms and conditions of Schedule 5 of this Agreement, and with -the Project Agreement. B. The provision of spare parts for tractors and harvest- ing machinery. 2t SCHEDULE 3 Procurement Procedures The Borrower will establish a special committee (here- inafter called the Committee) for the purpose of directing the procurement of goods under the Project. The Commit- tee shall consist of representatives of the Borrower (one of whom shall be the chairman), the Government of Hary- ana and ARC. Under the Committee's direction, HAIC will organize procurement of equipment eligible for financing out of the proceeds of the Credit in accordance with the following procedures: 1. Tractors and Spare Parts for tractors (a) HAIC will obtain quotations for lots of at least 500 tractors in order to import about 6,000 tractors. Quotations will be sought by public invitation, on unit prices at varying quantities, from those suppliers in Bank member countries and Switzerland who have established tractor manufactur- ing facilities in India, or have obtained necessary approvals of the Borrower, for the manufacture of tractors in India, prior to the date on which quotations are sought. Before bids are invited the Committee will furnish to the Associa- tion, for its comments, the text of the invitations to bid, the specifications and other bidding documents, together with a description of the advertising procedures and cover- age to be followed for the bidding, and shall make such modifications in the said documents or procedures as the Association may reasonably request. (b) HAIC will require all suppliers submitting quota- tions to give full particulars as to proposed pre-sales and after-sales service arrangements, including provision for initial spare parts equal to 15% of the c.i.f. price of trac- tors supplied. Any supplier not providing satisfactory as- surances as to service arrangements would be disqualified by the Committee. 22 (c) HAIC will advertise through LMB and the Partici- pating Banks the quoted prices and the service 'arrange- ments offered by the different suppliers. Beneficiaries will be required to state to the Primary Bank or the Participat- ing Bank for transmittal to HAIC their choices, in order of preference, of, and at the 'same time apply for an Agri- cultural Loan for, tractors which they will be willing to buy. Loan applications will be processed in accordance with the provisions of Schedule I to the Project Agreement. (d) HAIC will aggregate the orders received, according to first tractor choices. If the aggregate orders for the par- ticular model come to below the minimum acceptable order for that manufacturer at the unit prices quoted for vary- ing quantities, the Committee will discard the first choice for those farmers and proceed on the basis of second or other choices. After approval by the Committee, HAIC will -send to the Association its analysis of bids and a state- ment ;of farmers' choices and its recommendations before orders are placed. The Association shall promptly inform the Committee whether it has any objections to the in- tended placement of orders and shall state the reasons for any objections it may have. (e) HAIC will subsequently place orders with the se- lected suppliers 'at the unit prices quoted. HAIC also will enter into contracts with the selected suppliers or their agents which would specify service arrangements and per- formance assurances including the -supply 'of spare parts. Agents representing suppliers will be required to sell post- warranty 'service. (f) HAIC will arrange through the suppliers' represen- tatives in India for the importation, insurance and trans- portation 'to Haryana of tractors. HAIC will arrange for the distribution of tractors to agents designated by the suppliers who would perform pre-sales services and sell the tractors to Beneficiaries. HAIC may charge agents a fee for its 'services. (g) Suppliers will be required to maintain stocks of spare parts referred to under paragraph 1 (b) of this Schedule by a designated representative in a central store to be released through agents for tractors imported under the Project. 2. Self-propelled combines and tractor-drawn harvesters, and spare parts therefor Self-propelled combines, tractor-drawn harvesters and spare parts for self-propelled combines and tractor-drawn harvesters 'shall be procured on the basis of international competitive bidding, in accordance with the Guidelines for Procurement under World Bank Loans and IDA Credits, published by the Bank in August, 1969, through arrange- ments to be established by the Committee. Bids would only be sought against approved loan applications -v.ich would then be bulked to a value of at least $100,000 equivalent excluding the value of associated spare parts for pur- chase by dealers. The Committee will require all suppliers submitting quotations to give full particulars as to proposed pre-sales and after sale service. Arrangements would in- clude provision for initial spare parts equal to 15o of the c.i.f. price of the harvesting machinery supplied. 3. For the purpose of evaluating bids for goods and asso- ciated services included in Categories III and TV (B) and (C) of the table set out in paragraph 1 of Schedule 1 to this Agreement, bid prices shall be 'determined and compared in accordance with the following rules: (a) The term "Local Bid" means a bid submitted by a manufacturer established in the territories of the Borrower for goods manufactured or processed to a substantial ex- tent (as reasonably determined by the Association) in such territories; any other bid shall be deemed to be a "Foreign Bid ". (b) The bid price under a Local Bid shall be the sum of the following amounts: 24 (i) the ex-factory price of such goods; and (ii) inland freight, insurance and other costs of delivery of such goods to the place of their use or installa- tion. (c) For the purpose of comparing any Foreign Bid with any Local Bid, the bid price under a Foreign Bid shall be the sum of the following amounts: (i) the c.i.f. price of such goods; (ii) the amount of any taxes on the importation of such goods into the territories of the Borrower which generally apply to non-exempt importers, or 15o of the amount specified in (i) above, whichever shall be the lower; and (iii) handling costs, inland freight, insurance and other costs of delivery of such goods to the place of their use or installation. S 25 SCHEDULE 4 Equipment Required for the Project 1. Tractors in the 25-55 hp range. 2. Tractor Implements: basic tillage implements, disc har- rows (with hard steel discs) and ploughs (with hard steel plough bottoms), mould-board ploughs, spring-tine culti- vators (with hard steel springs), seed and fertilizer drills, levelling blades, tractor-mounted power sprayers and trailers. 3. Harvesting Machinery: self-propelled combines and tractor-drawn harvesters. 4. Spare parts for tractors and harvesting machinery. 5. Pumps, electric motors, electric connections, tubes for g tubewells, and sprinkler irrigation sets. 26 SCHEDULE 5 Principal Terms of Relending Agreement The following sets forth the principal terms and condi- tions under which the proceeds of the Credit or the equiv- alent thereof shall be lent to ARC by the Borrower: (a) Term: 9 years. (b) Repayment Terms: One lump sum repayment for each drawing by ARC at the end of the respective term of the Loan. (c) Interest Rates: 5% per annum with 1/4% rebate for prompt payment of interest and principal. (d) The counterpart funds generated by the sale of initial :spare parts to dealers shall be used only for making loans for minor irrigation. (e) Exchange Risk: for account of India.