30 July 2025 · 7 min read
Lines of credit extended through India's EXIM Bank are one of the more under-explained mechanisms in the bilateral relationship — this piece breaks down the structure.
A Line of Credit (LOC) is a concessional loan the Government of India extends to a foreign government — or, in some structures, a foreign financial institution or regional development bank — through the Export-Import Bank of India (India Exim Bank), specifically to fund the purchase of Indian goods, services, and project exports.
The money does not flow to the borrowing government directly. India Exim Bank disburses funds to the Indian exporter or EPC contractor executing the project, while the recipient government's obligation is a sovereign loan repayment to India Exim Bank. The commercial contract itself sits between the Indian exporter and the local project authority, separate from the sovereign loan agreement.
LOCs have historically funded infrastructure-heavy sectors: power transmission and generation, water supply, irrigation, roads, railways, and agro-processing plants. This reflects a preference for projects with clear, verifiable deliverables, and LOC-funded contracts typically require a minimum share of Indian goods and services in the project — an explicit condition of the financing, not an informal preference.
For an Indian SME or mid-size exporter, an LOC-funded project can be a lower-risk way to enter a new African market, since the buyer's payment obligation is ultimately backed by a sovereign-to-sovereign loan agreement rather than resting solely on the commercial creditworthiness of a single local counterparty.
LOC-funded tenders are typically published by India Exim Bank and the implementing agency in the recipient country. IACCI's Tenders & Trade Enquiries listings, alongside direct engagement with India Exim Bank's published LOC project pipeline, are both practical starting points for a member business exploring this route — and IACCI can help members understand whether a specific opportunity is a fit before they commit resources to bidding.