India - Second Industrial Imports Project : Credit 0078 - Development Credit Agreement - Conformed

CREDIT NUMBER 78 IN Development Credit Agreement (Second Industrial Imports Project) BETWEEN INDIA AND INTERNATIONAL DEVELOPMENT ASSOCIATION DATED AUGUST 11, 1965 AGREEMENT, dated A goust I , 1965, betweeI IN DIA, acting by its Presilent (itr ei r ater mi(led the I1 Torrower) and IN7uNAATIONAL 1\)i*Viaival.:Ni Ass4WATroN (hereinafter called the Association). ARTICLE I Credit Regulations; Special Definitions SBCTION 1.01. The pa-rties to this Agieemniit accept all the provisions of Developimiiet Credit Regulations No. I of the Association dated June 1, 1961, with the same force and effect as if they were fully set forth herein, subject, how- ever, to the followinig modificationls tHiereof (Said Develop- ment Credit Regulations No. I as so modified being herein- after called the Regulations) : (a) Section 2.02 is deleted and the following new Section is substituted therefor: "SECTION 2.02. 8ervice Charges. Service charges at the rate specified iii the Develop- ment Credit Agreement shall be payable respectively (i) on the principal aiount of the Credit withdrawn from the Credit Account and outstanding from time to time, and (ii) on the principal amount of any special cominitieit eitere(d iito by tie Association pursuant to Section 4.02 aid oilstaidiing fron time to time." (b) Section :3.01 is deleted aid the following new Section iS substituted therefor: "'SECTION 3.01. ('urrccies %i nt ich ('ost of Goods is to be Paid and Proceeds of the Gredit are to be Withdriwu. (a) Except as the Itorro(wr .anid the Associationl shall otherwise agree, the cost of goods acquired out 4 of the proceeds of the Credit shall be paid in the respective currencies of the countries from which such goods are acquired. (b) The proeeds of the (Credit shall be wiidtrawn from the Credit Account: (i) on account of expenditures in ciriency of the Borrower or for goods priodtueml in (including services supplied frot) thw territories of the Borrower, ill such ciirr-enley or ciurrencies as the Association shall fron time to time reasonably select; (ii) in all other cases, in the currency in which the cost of the goods acquired out of such proceeds has been paid or is payalle. (c) The Borrower and the Association may from time to time agree on any other currency in which withdrawals shall be made." (c) A new Section 3.04 is inserted after Section 3.03 as follows: "SECTION 3.04. Purchase of Currency of Withdrawal with Other Currency. If withdrawal shall be made in any currency which the Association shall have purchased with another currency for the purpose of such withdrawal, the por- tion of the Credit so withdrawn shall be deemed to have been withdrawn from the Credit Account in such other currency for the purposes of Section 3.03." (d) Section 3.04 is renumbered as Section 3.05. (e) Section 8.04 is deleted. (f) Paragraph 5 of Section 9.01 is amended to read as follows: "5. The term 'Borrower' means India, acting by its President." 5 SECTION 1.02. Except where the context shall otherwise require, the following ternis shall have the following mean- ings wherever used in this Agreement or any Schedule thereto: (i) The termi "Specified Enterprises" shall mean such firms as shall be agreed upon by the Borrower and the Association in the maiiufacturing industries pro- ducing the following types of capital equipment: (a) comimiercial vehicls and automotive compo- nents; (b) machine tools (machinery to produce other capital equipnit, iiicluiIiing lathes, planing, milling, lapping and boring m11achines) ; (c) cutting tools (metal-Cuttiig or -working units of machine tools 4uch as twist drills, tool bits and grinding wheels, but excluding hand tools such as files and chisels); (d) electric equipment (transformers. motors, switchgear, cables and wires) ; and (e) heavy coistriuctionl e(uiml)IeIt. (ii) The teri "'I rupees" and the letters "Rs." mean "currency of the liorrower. ARTICLE II The Credit 81,XImION 2.01 TVI\ -s it :1P1VV8 10 ma111ke 0VIailable to the Borrower, on the terms and conditions in this Devel- opment Credit Agreement set forth or referred to, a devel- opiment credit iii an amount ii various V, u rrencies equivalent to one hundred million dollars ($100,000,000). SU'rION 2.02. Tiv Associatio shiil opwit it 'edit. A(- count on its books in the nanme of the Borrower and shall credit to such Credit Account the amount of the Credit. The amount of the Credit may be withdrawn from the Credit Account as provided in, aid subject to the rights of cancellation and suspension set forth in, this Agreement and the Regulations. 6 SECTION 2.03. Except as the Borrower aid the Associa- tion shall otherwise agrec: (a) h1e0 Borrower shll 1be eititled, subject fo 1lhe pro- visiois of thfis Agreement nil the llegulations, to withdraw from the Credit Account (i) aiouits expenided for , reasonable cost of goods to be acquired out of the proceed of the Credit, and (ii) if the Associatii hl.l- so agree, s1 am1oIuts as shall bo requir-I-d fi imeet paylliils to be ilad, for the reasonable cost of I I oing. (b) No witlidrawals sliall be iiadl oni accoujit of expendi- tures prior to Jaititary 1, 1965. (c) No withdrawals shall be made on acconit of expendi- tures in the currency of the Borrowei or for goods produced in (inciluding services supplied from) the territories of the Borrower. SECTION 2.04. The Borrower shall pay to the Association a service charge at the rate of threc-fourths of one per cent (3/ of 1%) per annum on the principal amount of the Credit withdrawn and outstanding fron time to time. The Bor- rower shall also pay to the Association a service charge at the rate of one-half of one per cent (½ of 1%) per annuin on the principal amount of any special coniiiiieiunt eutered into by the Association pnirs11ant to Hetion 4.02 of the Regulations and outstanding from time to time. SECTION 2.05. Service charges shall be patyable semi- nually on January 1 and July 1 in each year. SECTION 2.06. The Borrower shall repay hlie principal amount of the Credit in seiii-aiiiual iistalneints payable on cach January 1 and July 1 commencing ,ann;ry 1, 1976 and nding July 1, 2015, euch instahtil. to anul iiieluiiig the iistiahtinenit iiayable n( .111ly 1, 198.5 4 to be on half of olie per cent (½ of 11) of suel prinleipal almouttt, and Cach in- stalment thereafter to be one and one-half per ceit (1½%) of såch principal amounit. 7 ARTICLE III Use of Proceeds of Credit SEXTION 3.01. The Borrower shall caiise, the proceeds of the Credit to be applied exclusively to the provision of the foreign exchange re(uired to cover the cost of acquiring the goods needed to carry out the Project. The specific goods to be acquired out of the proceeds of the Credit, the enterprises which slhall neqiire such goods, and the methods and procedures for procuireiient, of suC goods shall he de- termined by agreeient between the Borrower and the Association, subject to modification by further agreement between them. SECTION 3.02. Except as the Borrower and the Associa- tion shall otherwise agree, the HOTrrow0br shall cause all goods acquired ut. of 1tho proce.4ds f the ( Credit to be im ported into the territories of he Borrower and to be used in the carrying out of the Project. ARTICLE IV Particular Covenants ShcrIoN 4.01. (a) The Borrower slill carry out, or cause to be carried out, the Project with due diligenpe and efficiency. (b) The Borrower shall: (i) promptly upon receipt of appropriate applications issue, or cause to be ;ssued, such import licenses as shall be required to carry out the Proj- ect; (ii) make available, or cause to be made available, promptly as leeded all foreign exchlanuge which shall be required to carry out the Project; and (iii) with respect to locally produced materials which are subject to allocation make, or cause to be made, allocations of such materials promptly and in such quantities as shall be required to carry out the Project. (c) Up1)oni reqIuiest from iie to time by tle Associationi, the Borrower shall proiiptly furnish to the Association the 8 prograins and plans for the i'ro,jc atnd aiy Inaterinl ml1odi- fications subsequently made therein, in such detail as the Association shall request. (d) The Borrower shall: (i) maiilaiii or cause t. be maintained records adequate to identif'y the goods acquired out of the proceeds of the Credit, to disclose the use thereof in the Project and to recor he I r'log r of Ie 'roject,; (ii) enable the Association's represeltatives to inspect the relevant records uiid documinit-s relatEdd 1) tI'e Ir)oject, the goods acquired out of the pr)oceeds of 1Hw Credit, the Speci- fied Enterprises and the other enterprises which shall ac- quire goods out of the proceeds of the Credit; and (iii) furnish or cause to be furnished to I le Association all such information as the Association shall reasonably request concerning the Project, the program (referred to in Sched- ule 1 to this Agreement) of which the Project is a part, the Specified Enterprises and the other enterprises which shall acquire goods out (. '!:o proceeds of the Credit, the goods acquired out of the p, weeds of the Credit and the expendi- tiro of the iprocoods of the Credit.. SECTION 4.02. (a) The Borrower and the Association shall utiperate fully to assure that the purposes of the Credit will be accomplished. To that end, each of them shall furnish to the other all such information as it shall reason- ably request with - -1 to the general status of the Credit. On the part of orrower, such informnation shall in- clude informat4 th respect to financial and economw.* conditions in thi itories of the Borrower und I'le intes untional balance of paymiienis p)osition oh the Borrower. (b) The Borrower and the Associationi shall fromi time to time exchange views through their representatives with regard to matters relating to the pup)oses of the Credit and the maintenance of te service thereof. The Borrower shall promptly inform the Association of any condition which interferes with, or threatens to interfere with, the accoiplishient of uw iurses of te (redit or the imlainl- tenance of the service thereof. 9 (c) The Borrower shall afford all reasoiiable opportun- ity for accredited represwutatives of the A ssociation to visit any part of the territories of the Borrower for purposes related to the Credit. SECTION 4.03. The principal of, and service charges on, the Credit shall be paid without deduction for, and free from, any taxes and free from all restrictions imposed under the laws of the Borrower or laws in effect in its terri- tories. SECTION 4.04. This Agreement shall be free from any taxes that shall be iiposel undlfier the Iaws (df the lBiorower. o. laws ill ol11l. ill ils tl-ritoriE's ol or ill 1o10 n,ecluion with the execution, issue, deliveIy o. registralioll thereol. SECTION 4.05. Except as the l1orrower and the Assoica- tioi shall otherwise agree, .he speciiled 1111' Ier-prises alnd the other enterprises which shall acquire goo(ls out of the proceeds of the Credit shall not, on the ground that they are partici)atilig inl the Plro.ject, he b11),jve to Iy conidfitionis or requirements not imposed on other eiterprises. ARTICLE V Remedies of the Association SECTION 5.01. (i) If any event specified in paragraph (a) or I)aragraph (c) oI Sectioii 5.02 of' 1 le ftegulationls shall occur and shall cotiiiie for a pvrio(l of thirty (ays, or (ii) if any event specified in paragraph (b) of Section 5.02 of the Regulations shall occur and shall continue for a period of sixty days after notice thereof shall have been given by the Association to the Borrower, Ihen at any sub- sequet thie during the coitionince Ilhereof the Associa- tionl, at its optionl, ma1y ell te prinicip.al of, I'he rit then outstanldinlg to be due alld pay.lblv iniaiediately, and upon any such declaration such priucipal shall become due and payable inuneditely, ahything in this Agreemiiit, to the coiitrary nlotwithstamidling. 10 SEuO'.N 5.02. The Borrower and the Assoiation hereby agroe that for the purposes of the developjiient eredit agreement (Industrial Imports Project) dated June 9, 1964 between the Borrower and the Association and this Devel- opineiit Crodit Agrecieii t ai eveiit refe rred to inl para- graph (b) of Section 5.02 of lte )evelopimient (reit Regu- lations No. 1 of the Asociation a-pplicale to either such agreemeit sliall be deemed to be an event under paragraph (b) of Section 5.02 of the Developiient CredilRegulatiois No. 1 of the Association applicable to the other such agreement. ARTIOLE VI Miscellaneous SECTION 6.01. Except as the Borrower and the Asso- ciation shall otherwise agree (i) the Closing Date in respeet of amounts for equipment referred to in paragraph 3(c) of Schodulo I to this Agreviøitbl shall b1J .1111!30, 1967, 11idt (ii) the Closing Date in respeet of all other aiouits in the Credit Account shall be March 31, 1967. SECTION 6.02; If this Development Credit Agreeenit shall not have come into force and effeet by September 30, 1965, this Developnient Credit Agreement and all obliga- tions of the parties 1ereunder shall terminate utess tle Association, after consideratioi of the reasons for the delay, establishes a later date for puirposs of is Hetion. 'i,Tl Associatioii sliall piroimtptly iotify tite Borrow(ur of suiet later dato. SECTION 6.03. The following addresses are specified for the purposes of Section 7.01 of the Regulatioiis: For the Borrower: The Secretary to the floverinent of Indfia Ministry of Finance, Departienit of Eýcoiioiiiic Affairs New Delhi, India Alternative address for cables and radiogramis: Ecofairs New Delhi 11 For the Association: International Development Association 1818 11 Street, N.W. Washington, D.C. 20433 United States of America Alternative address for cables and radiograis; Indevas Washiiigtoi, 1).( . KJI:rnoN 6.04. A Seretary to (ite (overiiient of India in the Ministry of Finaiice is designated for the purposes of Section 7.03 of the Regulations. IN WITNESS WHEREOF, the parties hereto acting through their representatives thereunto duly authorized, have caused this Development Credit Agreeinent to bo sigied in their respective naies and delivered in the District of Colurmbia, United States of America, as of the (lay and year. IirsHt abovo writtenl. I.NDIA By Aulhorized Representative INTERNATIONAL DEVELOPMENT ASSOOJATION By Ve President 12 SCHEDULE 1 Description of Project 1. The Project forms part of a program of the Borrower to increase the utilization of existing produictive capacity and existing capital equipment in India by increasiing the availability of foreign exchange for Lae import of mate- rials, components, spare parts and tniselaneous items of manufacturing equipmenit. 2. The Project consists of: (i) the import of materials, components and spare parts required to make possible certain levels of production during the period April 1, 1965 to March 31, 1966 ("period 1965/66") by the Specified Enterprises and to provide the basis for further increases in production thoreaftvr; (ii) N1e iiiim (if' siare )n rts required for the maintenace of existing heavy construction equipment and capital equipment of the types produced by the Specified Enterprises; and (ii) the iiimiort of soiiie miHcollaneouN items of capital cIiI)iiien, I by the Specified Enterprises. 3. More specifically the Project has the following objec- tives: (a) The achievement during the period 1965/66 by the Specified Enterprises of the following approximate levels of production: 35,000 trucks aid buses for the civilian market; Rs. 400 million worth of automotive components; Rs. 260 million woilhI of iiachine tools; Rs. 135 million worth of cutting tools; 1.8 iillion h.p. of electric motors; 4 million KVA of electric trans- formers; Rs. 170 iiiillion worth ol (lectric switchgear; Rs. 80 million worth of electric stanipings; Es. 750 million worth of cables and wires; and Rs. 150 million worth of heavy construction equipment. The produc- tion targets stated hi rupees are based on the present level of ex-factory prices. 」