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VIEWS: 22 PAGES: 90

									                                         PART-IV

                                       IMPORTS
1.1 In the context of the system of dual rate of exchange (i.e. partial convertibility of the
Rupees) introduced in 1992 two rates of exchange came into existence. (1) Official rate of
exchange and (2) Market rate of exchange. Subsequently, the official rate of exchange was
abolished and only one rate to exchange remained. Government of India’s policy of imports
was also liberalized. The system of release of foreign exchange from free resources was
discontinued. All the production units and zonal Railways have to meet their requirements of
foreign exchange from market. The revised procedure is as under:-

(a)    Railways will obtain their foreign exchange requirements from the market

(b)    However, the standard financial procedures governing the standard authorisation of
       rupee expenditure including internal financial clearance for incurring foreign
       exchange expenditure will be applicable.


(c)    Consequent on the liberalization of imports, earlier restriction in vogue vide Railway
       Board’s letter No. 82/F(FEX) 1 dt. 13.01.1986, restricting the powers of GMs for
       release of foreign exchange upto Rs. 10 lakhs in each case with annual ceiling of Rs.
       1 Crore has been abolished. GM’s have full powers upto their powers of import, i.e.
       Rs. 2 crores at present.

(d)    There is no need for obtaining Board’s approval for floating Global Tender for
       procurement. However in respect of import tenders valued more that Rs. 2/- crores,
       the tender committee’s recommendations duly approved by the GM should be
       submitted to Board for final approval.

(e)    foreign Exchange payment made and commitments entered into during each month
       both in rupee terms and in foreign currency will continue to be advised to Board. This
       statement should reach Railway Board by the 10th of the succeeding month.

(f)    As regards transaction financed by lateral/multilateral credits etc. all the extant
       procedures for obtaining Board’s approval etc. including foreign exchange release
       will continue. Similarly contracts proposed for imports from countries covered under
       Rupee Payment Agreement are also to be forwarded to Board’s office as in the past.

(g)    Despite relaxation of the procedure for foreign exchange, import of
       material/components and equipment etc. should be restricted to only inescapable
       circumstances and keeping in view the continued scarce foreign exchange reserve of
       the country.

(h)    Earlier system of DGTD clearance has become irrelevant, as there is only a negative
       list of items, which cannot be imported without prior clearance from Government. If
       any item in the negative list needs to be imported, the proposal should be sent to
       Railways Board.

Authority: Bd’s letter No. 92/F/FEX/1/1 of 28.05.1992/ 01.06.1992 (Annexure II/3-20)
1.2 GMs of Production Units may in addition grant permission for invitation of tenders on
Single/Limited/Global tenders basis for procurement of components and materials required
for their production Programme as approved by Railway Board without any monetary limit
on the estimated foreign exchange expenditure.

1.3. This system of clearance from indigenous angle from DGTD, Department of Electronics
etc. has been abolished. At present there is only one negative list of items, which cannot be
imported without prior clearance from Govt. of India.

Authority: Bd’s letter No. 84/Dev, Cell /ILMI/Policy of 11.02 1986 (Annexure IV/1-14)

1.4. In respect of purchases where the foreign exchange content is estimated to be in excess
of Rs. 3.5 lakhs, Tenders should always be called for duly sending Tender Notice to the Local
Official representative (Embassies of Trade Commissioners) of the Member Countries of
World Bank and Switzerland following the bidding and contracting procedure laid down by
the world Bank.

1.5 Currency for bidding: - Currency for payment and evaluation of bids shall be as
following under the prescribed I.D.A. procurement procedure: -

1.5.1. Currency of bidding: - Price in the quotation should be in the currency of the bidder
of in U.S Dollars of in any other currency widely used in international trade except for
expenditure incurred in India which should be stated in Indian Rupees.

1.5.2 Currency of payment: - The contract price will be normally paid in the currency of
currencies in which the price is stated in the successful tender. However, purchaser reserves
the right to effect payment of equivalent amount in the currency or currencies of the country
of origin of the goods in case the price is stated in other currencies. The equivalent amount
will be calculated on the basis of rates of exchange prevent on the date of payment.

1.5.3. Earlier criteria for evaluation and comparison of bids in import tenders, was exchange
rate ruling at the time of decision of notifying the award to the successful bidder i.e. date of
making the recommendations of the Tender Committee. This procedure was applicable for
world Bank/ADB tenders as per Railway Board’s letter No. F (LN) 71/5/1 dt 10.06.1971 was
also made applicable to all imports including imports from free resources. This procedure has
since been modified with effect from August’ 94 and the revised procedure is as follows:

        “ to facilitate evaluation and comparison, the purchaser will convert all bid prices
expressed in the amounts in various currencies in the Bid price as payable, to the local
currency of the purchaser’s country at the B. C. selling market exchange rate established by
the State Bank of India in the purchaser’s country for similar transaction as on the date of Bid
opening”

Authority: Bd’s letter No. 92/F(FEX) 1/1 of 10.08.1994 (Annexure IV/ 1-31)
                  [ No. F(LN) 71/5/1 of 10.06.1971]
             96/RS(G)/11/13/Misc/ pol. Of 22.12.1997 (Annexure IV/ 1-37)
             99/F(FEX) 1/1 of 03.02.1999 (Annexure IV/1-38)
1.5.4 The Ministry of Finance (DEA) have issued instructions regarding the methodology to
be followed and discount and exchange rates to be adopted for the evaluation of tenders
which are accompanied with financial packages. They had also circulated the discounting
rates for the quarter April to June ’89.

Authority: Bd’s letter No. 89/F/EX/1/1 of 30.05.1989 (Annexure IV/1-21)

1.5.5 The value of purchase against import contracts should be taken as CIF for determining
the level of the Tender Committee and the approving authority.

Authority: Bd’s letter No. 87RS(G)/772/2 of 20.08.1987 (Annexure IV/1-15)

1.6 GMs have been delegated with powers to sanction expenditure under foreign exchange
upto Rs. 2 crores in each individual case on CIF basis. This delegation is personal of the GM
and need to be exercised in consulation with the FA & CAOs. It will not be permissible to
have the sanction under this delegation initially issued by DGM and countersigned
subsequently by GM. These delegations are not to be utilized for sanction of foreign
exchange for Air lifting of the items irrespective of the amount involved.

1.6.1 Utmost care should be exercised in sanctioning the foreign exchange expenditure,
which should only be in respect of items, which are absolutely essential and inescapable.

Authority: Bd’s letter No. 77 /F(EX) 24/DP/13/Part II of 04.12.1973 (Annexure IV/1-03) &
                            82/F(F.Ex) 1/1 of 12.01.1986 (Annexure IV/1-13)

1.7 The Tenders involving foreign exchange should be finalised expeditiously. The delays in
finalization of tenders result in non-utilisation of Foreign exchange earmarked for the
purpose, change in comparative position of the offers to the fluctuation the exchange rates
and the possibility of the possibility of the firms not extending the validity of their offers.

Authority: Bd’s letter No. 83/F(F.EX) 3/1 of 26.10.1983 (Annexure IV/1-11) &
                           87/F(F.Ex) 1/3 of 19.05.1989 (Annexure IV/1-20)

1.8 Shipment

1.8.1 As per general policy of the government, contracts for imports from abroad may be
finalised on F.O.B./F.A.S basis and those for export from India on C&F basis and prior
concurrence obtained form the Ministry of Shipping and Transport (Chartering Wing-
Transchart) before making any departure therefrom.

1.8.2 A set of specimen shipping clauses to be incorporated in various types of contracts for
imports and exports of general liner, and bulk cargoes is indicated in the annexure to Board’s
letter No. 77/RS (F) 794 dated 5 th August 1982 for guidance. It should be ensured that the
prescribed shipping clause is incorporated in the contracts.

Authority: Bd’s letter No. 77/RS(F) 794 of 05.08.1982 (Annexure IV/1-09)
1.8.2.1 For shipment from USA it is further clarified that Govt. cargos can be shifted by any
of the member line of the conference (INDPAKCON) Provision to be made in the purchase
orders on FAS vessel basis regarding recovering wharfage charges by the carriers from the
USA suppliers as per the following clause.

       “All Charges to FAS vessels including wharfage charges similar to Terminal handling
charges will be on seller’s account”

Authority: Bd’s letter No. 87/RS (G)/779/28 of 17.08.1993 (Annexure IV/1-28)
            [O.M. No. SC-19011/1/93-ASO II of 22.06.1993]
           O.M. No. SC-18013/1/92-ASO II of 25.05.1993 (Annexure IV/1-25) and
           O.M. No. SC-22011/1/94-ASO II of 13.07.1994 (Annexure IV/1-30)

1.8.2.2 For shipment of Govt. cargo from other than USA, necessary stipulation may be made
in the purchase order that shipment should be arranged b conference line vessel and Indian
line vessel wherever possible.

Authority: O.M.No. SC-22011/1/94- ASO-II of 15.02.1995 (Annexure IV/1-33)

       In the changed context of economic liberalization the ocean transportation of cargo
under the control of Government/Public sector undertakings the policy regarding ocean
transportation of cargo is reviewed as follows:

       (i) Government policy for import contracts to be finalized on FOB/FAS basis and for
exports on CIF basis in respect of Government owned/Controlled cargoes on behalf of
Central Government Departments/State Government Departments and Public Sector
Undertaking under them and centralized shipping arrangements through the Ministry of
Surface Transport (Chartering Wing) in association with the concerned user
Ministry/Deportment/PSU ma continue.

        (ii)Prior permission is required to be obtained from Ministry of Surface Transport of a
case to case basis in case of any departure from the above policy. However Ministry of
Surface Transport shall ensure disposal of such requests within four working days on receipt
of the complete information/request from the concerned Ministry/PSU.

        (iii) Ministry of Surface Transport, Chartering Wing to ensure full utilisation of
suitable Indian Vessels in case they are able to meet the indenter’s requirements at
competitive rates and are able to maintain the time schedule.

        (iv) in case of import of bulk quantities like fertilizers, coal, food grains etc. where
freight element is substantial, a representative from Ministry of Surface Transport may be
invited to participate in the discussions for advising on the shipping aspects of import/export
contracts.

        (v) Ministry Surface Transport should make out all full effort to finalise vessels,
Indian or foreign , at the most competitive rates and before fixing the vessels, prior approval
of the indenting department/PSU should obtained.
       (vi) In order to make imports and exports cost effective and for judicious use of
foreign exchange, Ministries/Departments should ensure imports on FOB/FAS and exports
on CIF basis failing which necessary No objection certificate (NOC) should be obtained from
Ministry of Surface Transport (Chartering Wing) while applying for release of necessary
foreign exchange for the purpose of chartering foreign vessels and for making freight
payment in foreign currency.

       (vii) The tendering system to be followed by Ministers/Departments/PSUs will be
standardized. The Cabinet Secretariat will initiate appropriate action in this regard.

Authority: O.M. No. SC-11014/1/94-ASO. II/Vol. III of 27.02.1996 (Annexure IV-35)

1.8.3 With a view to ensure compliance of the shipping clause incorporated in the contracts,
the following stipulation may also be made in the letters of credit relating to imports from
U.K. including Northern Ireland (also EIRE), the north continent of Europe (west Germany),
Holland, Belgium, France, Norway, Sweden, Denmark, Finland and from the France and
Western Italian Ports of the continental seaboard of the Mediterranean and Adriatic ports:-

        “ L/C negotiable against production of complete set of clean bill of lading etc. and
certificate by M/s Schenker & Co. G.M.B.H. Hamburg or their accredited local load agents,
certifying that shipment has been arranged in accordance with the instructions of the Ministry
of shipping and Transport(chartering wing) (TRANSCHART). New Delhi”.

        1.8.4 All the public Sector undertaking s/Projects, Purchasing/Selling Organization
under the Administrative control of Ministries/Department concerned have to follow the
prescribed procedure for arranging shipment of their cargo thro’ chartering wing
(TRANSCHART), Ministry of Shipping, & Transport and incorporate the prescribed clause
in the contracts and also make necessary stipulation in the letters of credit.

        1.8.5 Two Copies each of all the contracts-whether F.O.B/FAS or C&F/C.I.F/ F.O.R/
Turnkey in respects of both imports as well as exports along with cargo particulars in the
prescribed Proforma enclosed (in duplicate) should be sent to the Ministry of Shipping &
Transport (Chartering Wing) as soon as the same are finalized for taking further necessary
action with regarded to the shipping arrangements.

Authority: Bd’s letter No. 77/RSF/794 of 05.08.1982 (Annexure IV/1-09),
           O.M. No. SC-22011/1/94-ASO 11 of 15.02.1995 (Annexure IV/1-33)
           85/RSF/794/5 of 05.12.1995 (Annexure IV/1-34)
          [O.M. No. SC-11011/1/86-ASO 11 of 26.06.1995]
          96/RSF/794/1 of 14.12.1999 (Annexure IV/1-39),
          [O.M. No. SC-18013/1/98-ASO 11 of 16.11.1999]

        A consolidated monthly statement indicting brief details of the contracts finalized for
import during each month should furnished to the Chartering Wing of the Ministry of Surface
Transport by the 15 th of the following month on a regular basis in a prescribed Proforma. A
monthly statement should be prepared in two parts, one in respect of FOB/FAS imports and
the other in respect of C&F/CIF imports.

Authority: Board’s letter No 85/RSF/794/5 of 13.10.1987 (Annexure IV/1-16)
1.8.6 A stipulation should invariably be made in the Tender Notice as well as in the contracts
to be placed on F.O.B. basis to the effect that port liner terms charges wherever applicable
will be to the seller’s account.
Authority: Bd’s letter No. 77/RS(F)794 of 28.09.1979 (Annexure IV/1-07)
1.9 Insurance: - Insurance of the consignment should be done in India by operating the
Railway Board’s open cover policies.
1.9.1 The basis for calculation of payment of Insurance premium under clause of the marine
Insurance cover is as under:
       FOB/FAS + 10% where the contract is FOB/FAB basis or C&F only where the
contract is C&F basis.
Authority: Bd’s letter No. 94/FS (POL) /IS/6 of 11.10.1994 (Annexure IV/1-32)
1.9.2 Based on the Principal Director of Audit. Findings regarding loss on account of failure
to obtain proper certificate of short landing and timely follow up of Insurance claims of
certain materials, remedial steps taken by DLW is communicated in the letter dt. 30.06.93
These aspects should be observed.
Authority: Bd’s letter No. 92/BC-DLW/2 of 30.06.1993 (Annexure IV/1-27)

1.10 Detailed procedure in regard to payment in respect of release of foreign exchange under
IBRD Loans/IDA credit has been indicated in Board’s letter No. F (LN) 61/ 12 of 26.02.1962
(Annexure IV/1-01)

1.11 Payment through letter of credit in respect of purchase involving foreign exchange can
also be accepted in exceptional cases where the sellers insist for such terms of payment.

1.12 Agency Commission: - Agency commission wherever payable on contracts placed on
foreign suppliers should be paid in non-convertible Indian Rupees at the T.T buying rate of
exchange ruling on the date of placement of contract/order as quoted by State Bank of India.
The amount towards agency commission so calculated in Indian Rupees is not subject to
variation.

Authority: Bd’s letter No. 75/RS(G)/145 of 14.07.75 (Annexure IV/1-04) &
                          82/F(F.Ex) 1/1-pt.1 of 28.03.1989 (Annexure IV/1-18)

1.12.1 The purchase shall have the right to retain the Agency Commission till after the
guarantee contemplated in the warranty clause is successfully discharged.

Authority: Bd’s letter No. 65/749/39/RS (G) of 13.09.1966 (Annexure IV/1-02)

        In respect of contracts for contracts for WTA and items of similar nature where
commissioning installation and proof testing are not involved, the agency commission will be
paid to the Indian Agents for each installment of supplies made by their Principals, after
receipt at the Indian Ports on the basis of a certificate to be obtained by the paying authority
from the port consignee.

Authority: Bd’s letter No. 89/RS (G)/779/6 of 16.06.1993 (Annexure IV/1-26)
1.12.2 Quotation of agency commission in respect of imported goods: In all cases of
imported goods the quantum of agency commission should be determined carefully with
reference to the nature of the imported stores, country of origin etc. in cases where the
commission appears to be on the high side, the specific question of reduction of percentage of
commission quoted and consequently the F.O.B. price of the contract should be taken up with
the firm. Negotiations may also be held with the firm for the purpose if and where considered
necessary. In cases where the agency commission exceeded 5 percent and it is not possible to
bring down further, specific approval of the General Manager with the concurrence of the FA
& CAO should be obtained before the tender is finally decided and the purchase order placed
on the firm, in all such cases i.e. where agency commission exceeding 5 percent has been
accepted specific reasons for the higher percentage should be clearly indicted in all
application for release of foreign exchange made to the Board.

Authority: Bd’s letter No. 82/F(F.Ex) 24-1/CLW/11 of 16.11.1982 (Annexure IV/1-10)

1.12.3 The above guidelines will not be applicable for Would Bank Financed Tenders.

1.12.4 All the particulars relating to the agency commission in the contracts for import of
goods services/works be reported to the Enforcement Directorate of Ministry of finance, to
prevent the leakage of foreign exchange and tax evasion on agency commission. Sufficient
copies of the relevant contracts and their amendments should invariably be marked to them.

Authority: Bd’s letter No. 89/RS (G) 779/6 of 26.04.1989 (Annexure IV/1-19)

       Board on the above instructions the following clause should be incorporated in the
Tender documents while floating tenders for the import of Railways items/ equipments.
“Foreign firms quoting direct against the enquiry and who want Indian Agents/Associates
an/or servicing facilities in India should indicate in their the name of their Indian
Agents/Associates or the representatives they have for servicing in India. They should quote
net FOB/FAS price, exclusive of the amount of remuneration or commission provided for the
Indian Agents/Associate. It should be understood that the purchaser will indemnify the
supplier against payment of such commission to the Indian Agents/Associates in rupees, in
India in respect of a contract arising out of invitation to tender, where the Indian
Agents/Associates’ remuneration or commission covers a part of the price against the
tender”.

         Besides the above, the following particulars should be called from the tenderer/or the
foreign firms with a stipulation that the Tenders which do not comply with the above
stipulations are liable to be ignored.

       i.      The precise relationship between the foreign manufacturer/Principals and their
               Indian Agents/Associates;
       ii.     The mutual interest which the manufacturer/Principal and the Indian
               Agents/Associates have in the business of each other:
       iii.    Any payment, which the Agent/Associate receives in India or abroad from the
               manufacturer/Principal whether as a commission for the contract or as a
               general retainer fee:
       iv.     Indian Agent’s Income-tax permanent Account number:
       v.      Past performance.
        In case, where it is felt that for the stores being imported, neither the Indian Agent nor
after-sales service is required, the following clause may be added:

        “Manufacturers are advised that we would prefer to deal direct with them without the
inter session of an Agent and therefore, they are advised to quote direct”.

Authority: Bd’s letter No. 89/RS(G)/779/6 of 13.04.92 (Annexure IV/1-23)

1.13 Air lifting: - Approval of the Railway Board should be sought for getting materials
despatched by air freight and this is so even in case where the air lifting is economical.
Board’s concurrence is necessary even in cases of import by air post parcel. Such proposals
should have the concurrence of FA & CAO and approved by General Manager personally,
Airlifting should be done by Air India flight and airfreights shall be paid in Indian Rupees.
The Proforma prescribed by the Board shall be adopted in approaching the Railways Board.

Authority: Bd’s letter No. 76/F(Ex)/1 of 21.12.1976 (Annexure IV/1-06) &
               76/F (Ex) 23/3/Vol.II of 27.09.1976 (Annexure IV/1-05)

        However, GMs/CAOS were authorized to order, in consultation with their FA &
CAOs, airlifting of specified categories of stores, viz., small consignments upto 50 kgs or
electronic items or sophisticated equipment upto the value of their powers i.e. Rs. 2 Crores.

      Airlifting should be done by Air India flight and Airfreight should be paid in Indian
Rupees.

Authority: Bd’s letter No. 92/F(FEX)1/1 of 24.05.1993 (Annexure IV/1-24)

1.13.1 Airfreighting should be done through Air India Flights and if so done, it is open for the
Railway Administrations to either use Air India Booking Office directly or use other booking
agents who will engage Air India flights. In selecting the booking agency the Railway
Administrations may keep the economy aspect in view and if they are able to engage the Air
India flights through Booking Agency at less then the authorized rates by way of freight etc.
there can be no objection arranging the booking through booking agents.

Authority: Bd’s D.O letter No. 80/RSF/794 of 12.09.1980 (Annexure IV/1-08)

1.13.2 In the proposals for airlifting of imported materials, the cost difference between the
sea-freight and airfreight should be indicated as also the saving in time by resorting to the
airlifting. Airlifting should be limited to a minimum inescapable quantity required in
exceptional and urgent circumstance of extreme urgency, Railway should take timely
procurement action to avoid the need for airlifting. For airlifting proposals complete
justification should be given bringing out the following:-

       (i)     Reasons/circumstance in which the item could not be procured earlier and
               airlifting has become inescapable.

       (ii)    In case of delay in initiation of procurement action or its finalisation, whether
               responsibility can be fixed, and if so action taken/proposed to be taken for the
               same.
       (iii)   Remedial action taken to avoid such delays in future.

Authority: Bd’s letter No. 82/F(Ex)1/1 of 12.09.1988 (Annexure IV/1-17)

       1.13.3 However, these instructions would not apply to items which necessarily have
to be airlifted on account of short shelf-life or their delicate/sophisticated nature or
considered too small for transportation by sea.

Authority: Board’s letter No. 84/F(Ex)/5/2 of 5/21.08.1984 (Annexure IV/1-12) &
                               82/F (EX) 1/1 of 12.09.1988 (Annexure IV/1-17)

1.14 Price preference for indigenous stores over imported stores:- This subject matter is
dealt with, in Chapter IV of Part III.

1.15 Inclusion of Clause regarding Overseas training in the Tender Documents for
procurement of M&P Equipments:- Clause regarding the overseas training in tenders for
contracts should bot be incorporated as a matter of course. In case where such training is
considered absolutely necessary a clause should be included in the tender documents that the
bidders will quote the rate for particular machine/equipment “with” and “without” training
component. This will facilitate payments separately for the equipment and cost of training.

Authority: Bd’s letter No. 86/F(F.Ex)105/Trg/7 dated 09.08.89 (Annexure IV/1-22)

1.16 Furnishing of EMMD/Bid security in respect of Import tender:

     With a view to safeguard the Railway’s interest adequately against losses, the limit of
EMD/Bid Security in import tenders are as under:-

 (a) For tenders value upto Rs 10 Crores        2% of the estimated tender value subject to
                                                ceiling of Rs. 10 lakhs.
 (b) for tender valued above Rs. 10 Crores      2% of the estimated tender value subject to
                                                of Rs. 20 lakhs.

1.17 Inclusion of clause in global tender: -

       To protect Railways interest due to exchange rate variation the following clause may
be incorporated in the Bid documents as well as while granting DP extension in Global
Tenders:-

       “ That any additional expenditure incurred by the purchaser on custom duty, freight
charges as also extra cost which may arise on account of variation in exchange rate during the
extended delivery schedule shall be borne by the contractor”.


Authority: Board’s letter No. 97/RS(G)779/18 of 02.12.1997 (Annexure IV/1-36)
                                   ANNEXURE IV/1-01
Copy of letter No. F (LN) 61/12 dated 26th February 1962 from the Joint Director, Finance,
Railway Board, to the General Managers, All Indian Railways and I. C. F.
       Sub: World Bank Loan to Indian Railways -Sixth Railway Project 298 IN
                      The World Bank have sanctioned a further loan of $ 50 million available
for meeting foreign exchange expenditure incurred for the Railways during the period 1st
October 1961 to 31 st December 1962. Except to the extent indicated below the procedures
for drawing on the loan will be the same as those laid down in Board’s letter No. F(LN)57/1
dated 9th October 1957 as amended by their letter of even number dated 5th November 1957.
In order to expedite the drawl of the loan which is closing by 31st December 1962, the Board
desire that for all payments arranged by the Railways directly to suppliers abroad in foreign
currencies, the procedure detailed below (which is called Case III procedure by the Bank)
should be adopted for payments in all currencies including payments in Yens in Japan (till
now Case III procedure was not being adopted for payments in Yens in Japan).
Case III Procedure-Claim bills of the suppliers would be received by the concerned
railways as hitherto. After these have been scrutinized in internal check, Deputy C. A. O. (G)
of the Railway should send by registered air mail a formal payment authority by name to J.
D. F. (SF), Railway Board, to arrange payment to the suppliers from the above loan if
payment relates to the period 1st October 1961 to 31 st December 1962. The payment
authority would be sent with the usual accounts seal and will be accompanied by Form B-III
(a) (circulated under Board's letter of 9th October 1957) with Columns 1 to 11 duly filled. In
addition one copy of the supplier's invoice or bill and one copy of the bill of lading should
also be sent. On getting the above authority for payment, J. D. F. (SF), Railway Board, will
send an application to the World Bank requesting World Bank to make payments direct to the
suppliers against proper acquittance to be obtained by the World Bank from the suppliers.
Simultaneously the Deputy C. A. O. (G) concerned will be informed by J. D. F. (SF) about
the action taken.
       The above instructions may be followed in respect of payments which have hitherto
been authorised through C. A. O., High Commission, London, except where payment has to
be made directly to private parties instead of through Bankers in England or in the continent.
The Case III applications should also be accompanied with copies in duplicate of the
contracts under which the payment is due.
        In the case of consignment carried in non-Indian vessels, the freight charges paid to
shippers could also be drawn from the World Bank if the vessels belong to countries which
are members of the World Bank (that is other than East European Countries), for such cases,
a copy of the bill of lading and money receipt for the amount of freight should also be
furnished to the Board together with the particulars of the contract. The reference of your
letter number forwarding B. III form, under which the reimbursement from the World Bank
for the cost of stores has been applied for, should also be given.
             Where payment has to be made by the Chief Accounting Officer, High
Commission, London for payment to private parties as distinguished from their bankers, the
Railways should furnish two copies of Contracts to the C. A. O. High Commission, London,
in addition to copy furnished to the I. S. D., London.
                                Please acknowledge receipt.
                                    ANNEXURE IV/1-02

COPY of Board's letter No. 651749139/RS (G) dated 13th September 1966 addressed to the
General Managers, All Indian Railways and L. C. F.

     Sub: Disputes/Claims pending with suppliers against Contracts for supply of steel.

            Attention is invited to Joint Director, Stores (Steel), Shri B. K. Rao' s D.O. letter
No. 65/749/ RS (S) dated 24th April 1965 addressed to C. O. S., Eastern Railway and copy
forwarded to you.

2. In view of the legal opinion recently received from the Ministry of Law, New Delhi
(relevant extracts enclosed) the instructions contained in para 4. 5 and 4.6 referred to above
stand modified to the following extant: -

         “The purchase has the right to retain the agency commission payable to the sellers
agents in India at least till after the guarantee contemplated in CI. 5 of the General Conditions
of Contract is successfully discharged".

3. In future, while allowing payment of Agency commission to the seller’s agents, the latest
view of the Ministry of Law should not be lost sight of.



                                           ********
                                    ANNEXURE IV/1-03

Copy of Board's letter No. 73/F (EX) 24/DP/13, Pt. II dated 4th December 1973 received
from the Joint Director, Finance (L. & F.), Railway Board, New Delhi and addressed to
General Managers, All Indian Railways including I. C. F.

         Sub: Delegation of power to release " Free Foreign Exchange’’ during the half-
              year October 1973—March 1974

        It has been decided that the General Managers may continue to release foreign
exchange from ‘' Free Resources " during the half-year October 1973-March 1974 not
exceeding Rs. 5,000 in each individual case subject to the overall ceiling of Rs. 50.000 for
the half-year for the import of essential and urgent requirements for the Railways. This is
subject to the following conditions: --

       (i) This delegation is personal to the General Managers and is to be exercised in
consultation with the F.A.&C.A.Os personally. It will not be permissible to have the
sanctions under this delegation initially issued by Deputy General Managers and
countersigned subsequently by the General Managers, as obtain now in respect of some of the
sanctions for purchases and works.

        (ii) This delegation will not extend to any source of foreign exchange other than "Free
Resources " and proposals if any relating to source other than " Free Resources" should
continue to be referred to board as at present. In this connection, Your attention is also
invited to Board's letter No. 71/F (EX.) 1 dated 31st May 1972 relating to imports from “
Rupee Payment " countries.

       (iii) The delegation is valid only up to 31st March 1974.

       (iv) This delegation is in respect of items for maintenance, replacements and
additions. Items banned for import such as office equipment e.g., calculating machines,
accounting machines etc. should not be procured under this delegation.

        (v) This delegation should be exercised only for procurement of those items which are
not available indigenously or for which suitable Indian substitutes are not available, The
position regarding indigenous availability should be checked in each case in accordance with
the order issued by the D. G. T. D. and requisite indigenous clearance from the appropriate
authority obtained.

       (vi) This delegation should not be utilised for releasing foreign exchange for air lifting
of the items irrespective of the amount involved. Such cases should be continued to be
refereed to the Board in terms of Board's letter No. F (EX) 13(i) 1170 /67.68 dated 27 th
November 1971.

        2. As the foreign exchange position continues to be very critical, utmost care should
be exercised in sanctioning the foreign exchange expenditure, which should only be in
respect of items, which are absolutely essential and inescapable.
        3. A statement of sanctions issued, giving particulars of the items imported and the
amount sanctioned against each item should be sent to the Board every month to reach by the
10th of the succeeding month. You should also furnish a summary statement as per proforma
attached

       4. Please acknowledge receipt.


                                 SUMMARY STATEMENT

                (Foreign Exchange releases given under delegated powers)
       I. Allocation----

       II. Releases--
            (a) Releases during the month-----
            (b) Total releases up to the end of the previous month
            (c) Total to the end of the month under reporting.

       III. Balance available (I-II)


        The board have subsequently enhanced the limit from Rs. 5,000 to Rs. 10,000 in
each individual case, subject to a ceiling limit of Rs. 1,00,000 per half-year vide their
Wireless Message No. 77/F (EX)/24/2/DP/1 dated 26th April 1977 and 78/(Ex)/24/2/DP/Pt.I
dated 18th April 1978.
                                  ANNEXURE IV/1-04

Copy of letter No. 75/RS (G)/ 145 dated 14th July 1975 received from Deputy Director,
Railway Stores (G) Railway Board, New Delhi addressed to the General Managers, All
Indian Railways, and. I. C. F.

Sub: Purchase of Imported Stores on F. O. B. /F. A. S. basis -- Rate of exchange for
     Conversion of agency commission into Indian Rupees---Revised Procedure

                A copy of D. G. S. & D. 's Office Order No. 83 dated 14th May 1975 on the
above subject is sent herewith. Although the instructions contained therein are primarily
applicable to the contracts placed by D. G. S. & D., Board have decided that the same will
also apply to the contracts placed by the Railways in future.



                                      ***********
            Copy of D. G. S. & D's Office Order No. 83 dated 14th May 1975.

     Sub: Purchase of Imported Stores on F. O. B./F. A. S. basis-Rate of exchange for
          Conversion of agency commission into Indian Rupees-Revised Procedure

     Ref: (1) Office Order No. 101 dated 7th September 1964, (2) Office Order No. 112
          Dated 28th September 1966 and (3) Office Order No. 22 dated 1st January 1973.

                 According to the existing instructions contained in the above cited office
orders, a specific stipulation in T/E and the resultant contracts has to be made as follows: -

      " Offers should be submitted on the basis of F. O. B. / F. A. S. port of shipment of your
principles/Manufactures/Indian Port/F. O. R. basis. (C. I. F. to be omitted in case of tenders
for supply of machine tools). In case of F.O.B./ F.A.S. offers, the prises to be quoted should
be your Principles/ Manufacturer's net F.O.B. /F. A. S. prices exclusive of profit, commission
etc. The Agency commission payable to you in terms of Agreement with your
Principles/Manufacturers should be indicated in rupees as a separate item which would not be
subject to variation in exchange rate ".

2. Inspite of the above stipulation in the T/E the tenders have been quoting gross F. O. B. / F.
A. S. value (i. e., inclusive of Agency Commission) in foreign currency indicating certain
percentage of the gross F.O.B./ F. A. S. value as their agency commission thereby leaving it
for the purchase officer to take out the element of agency commission from the gross F. O.
B./F. A. S. value and convert the same into Indian Rupee by taking into account exchange
rates ruling on the date of offers. Since the offers received would bear different dates
different rates of exchange had to be taken into account for working out the agency
commission. In some cases the tenders also ask for the exchange variation as per the rate of
exchange ruling on the date the payment to their principles abroad was effected.

3. With a view to enforce uniformity in the procedure the above question was discussed in a
meeting held on 5th February 1975 in the Department of Supply in which the representatives
from the Ministry of Finance and State Bank of India were also present. It has been decided
that for conversion of Agency Commission T. T. buying rate should apply in respect of future
F. O. B. / F. A. S. contracts placed directly on the suppliers abroad or through their Agents in
India, and the quantum of the agency commission payable should be worked out on the basis
of T. T. buying rate ruling on the date of placement of contract.

4. Consequently the clause referred to under para 1 above, may be amended to read as under
for the future T/Enquires and the resultant contracts placed on F. O. B. / F. A. S. basis.
   CLAUSE TO BE STIPULATED UNDER THE SPECIAL CONDITIONS OF T/E

A. " Offers should be submitted on the basis of F. O. B./F. A. S. port of shipment of your
principals/Manufactures /* C. I .F. Indian port /F.O.R. basis, The purchaser reserves the
right to place the order on any such basis.

              In case of F. O. B. /F. A. S. offers, the prices to be quoted should be your
principals' / Manufacturer's net F. O. B. / F. A. S. prices exclusive of profit, commission etc.
The Agency Commission payable to you in terms of the Agreement with your Principal’s
Manufacturer’s should be indicated both in foreign currency as well as in Indian Rupee to be
converted by applying T. T. Buying rate of Exchange ruling on the date of offer. The agency
commission finally payable to you under the contract will, however, be converted in Indian
Rupees at the T. T. buying rate of exchange ruling on the date of placement of the order and
which shall not be subject to any further exchange variation. Your quotation on F. O. B. /F.
A. S. basis should be supported by the Manufactures
Invoice”.
                              (*Omit in the case of Machine Tools)

     CLAUSE TO BE STIPULATED UNDER THE SPECIAL CONDITIONS OF
                      F. O. B. /F. A. S. CONTRACTS

B. " The prices stipulated under this contract are your principal's/manufacture’s net F. O. B.
/F. A. S. prices exclusive of profit, commission etc.

    Your agency commission of ***……..has been converted into Indian Rupees the T. T.
buying rate of exchange of Rs. 100/- ****……..ruling on the date of placement of this
contract as quoted by the State Bank of India. The amount of commission so calculated will
be paid in India in Indian Rupees as per the payment terms of this contract and will not be
subject to any exchange variation ".

For Purchase Officers-

* * * To be indicated in foreign currency.

* * * * The T. T. Buying rate should be ascertained from the State Bank of India (Exchange
Control Branch) and indicated are in the contract before the placement of the order. In
exceptional case where it is not possible to do so, the same should be indicated in the contract
by issue of necessary amendment letter.
                                   ANNEXURE IV/1-05

Copy of letter No. 76/F (EX) 23/3 Vol. II dated 27th September 1976 received from Joint
Director, Finance (L & F), Railway Board, New Delhi, addressed to the General Manager
(Accounts), I. C. F., Madras 5600 038.

       Sub: Air Post Parcel

       (Ref: Your F. A. & C. A. O.' s D. O. No. A SF/ FX/Vol. IV/ 169 dated 23rd July
       1976 and D. O. letter No. 76/F/(EX)23/3 dated 20th August 1976 from the
       undersigned to Shri R. Sarangarajan).


   Ministry of Finance have clarified that there is no difference between the stores to be
imported by air or by air Post Parcel except that in the case of latter there is an element of
packing and postage charges. In the circumstances they desire all such cases should be
referred to them for concurrence.



                                          *******
                                        ANNEXURE IV/1-06

Copy of letter No. 76/F (FX)/ 1 dated 2 1st December 1976 received from Joint Director,
Finance (LF), Railway Board, New Delhi to the General Managers, All Indian Railways, C.
L. W., D. L. W and I .C. F.

                    Sub: Airlifting of imported materials

                The Ministry of Finance (DFA) have, vide their O. M. No. 6(5) FEBI/76 dated
6th December 1976 delegated to the Financial Commissioner (Railways) the powers to
sanction airlifting of imported stores subject to certain conditions. In order to process
proposals received from the Railways/Production Units quickly, it has been decided that all
proposals for airlift of imported materials should in future be submitted in the proforma
enclosed.

2. Particular attention is invited to the Notes in the proforma. It may be appreciated that,
unless the proposals are complete in all respects, back references would become necessary
and thus delay the issue of the sanction.

3. This supersedes all previous instructions on the subject.




     PROFORMA FOR PROPOSALS FOR AIRLIFT OF IMPORTED MATERIALS

1. Railway/Production Unit ………………………………………….
2. Description of the item /nomenclature……………………………………………………..
3. (a) Stock in hand…………+ on order……..(unit of measurement) as on…………..(date).
   (b) Period up to which quantity at (a) will suffice…………………..
4. Order for the material to be airlifted placed/expected to be placed on………… …(date)
for …………..(quantity).
5. Indigenous clearance obtained on……….(date)/applied for on………….{date}
6 Foreign exchange released vide Board’s letter No.-------- dated ---------             /applied for
vide letter No. ……………. dated --------------.
7.   Category of proposals (please tick)
     {          }       (a ) Material too delicate/sophisticated /small for sea transport.
     (                  )   (b) Material has short shelf-life of --------- months, as against the
                            expected transit time by sea transport of ------------------- months.
     (              }   (c) Air-freight is cheaper.
         (          ) (d) Material is urgently required for production/maintenance purposes.

8. In case of 7(c) and (d), detailed justification …………………………….
9. Quantity proposed to be airlifted .. …………………………………….
10. Approximate weight ……………………………………………………………………
11. Airlift from --------------------------- to……………………….
12. Air- freight charges …………………………….
13. The proposal has been concurred in by the FA&CAO and approved by the General
Manager, personally. The air lifting will be done through Air-India and payment made in
India in rupees.

                                                        Signature---------------------------------

                                                        Designation-------------------------------

Note: -

(1) Wherever more than one alternative is indicated the item(s) not applicable should be
scored out.

(2)     Justification under item 7(c) should give details of the relative costs, taking recent
actual expenditure into account.

(3). Justification under item 7(d) should indicate why the order could not be placed in time
for the material to be obtained by sea transport. If any deficiencies in internal procedures
have been noticed steps taken to rectify the same should also be indicated.

(4). The proposal should only be signed by officers of the J. A. grade and above.

(5). Exceptional cases, where airlifting through Air-India is not possible, should be
accompanied by detailed justification, as the sanction of the Ministry of Finance (DFA) will
have to be obtained.



                                         **********
                                   ANNEXURE IV/1-07

                  GOVERNMENT OF INDIA (BHARAT SARKAR)
                 MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                             (RAILWAY BOARD)

No 77/RSF/794                                        New Delhi, dated 28th September 1979

The General Manager/(Stores),
All Indian Railways, including C. L. W., D. L. W. and I.C.F.

          Sub: Cargo handling charges/Port Liner Term charges in respect of
               Shipments from U. K. and Continent

                   A copy of O. M. No. 9 ASO-II(2)/78 dated 23rd February l979 received
from the Ministry of Shipping and Transport (Transport Wing) New Delhi is enclosed
herewith with its enclosures for your information, guidance and necessary action.

                 It should be ensured that a stipulation is invariably made in the Tender
notices as well in the contracts to be placed on F. O. B. basis to the effect that Port Liner
Term charges where applicable, will be to the Seller's account.

                 Please acknowledge receipt.

                                                                            Sd/-
                                                            Dy. Director, Railway Stores (F)
                                    ANNEXURE IV/1-08

Copy of D. O. No. 80/RSF/794 dated 12th September 1980 from Shri E. V. Viswanathan,
Addl. Director, Railway Stores (F), Railway Board, New Delhi to Shri K. Yeeraraghavan,
C.O.S. Wheel and Axle Plant, Bangalore-560 046.

My Dear Yeeraraghavan,

                   Sub: Air-freighting of Railway Cargo

                   Ref: Your D. O. Letter No. WAP/S/66 dated 14th August 1980.

        With reference to your above letter the instructions of Ministry of Shipping and
Transport are quite obligatory for use of the Transport Ministry only for arranging ocean
transit of materials ordered abroad. In regard to air cargo, Railway Administrations are not
obliged to use the Ministry of Transport agents. The instructions of Ministry of Finance are
that only the air freighting is to be done through Air India flights. In so doing it Ministry are
for the Railway Administrations to either use Air India Booking Office directly or use other
booking agents who will engage Air India flights. In selecting the booking agency the
Railway Administrations may keep the economy aspect in view and if they are able to engage
the Air India flights through booking agents at less than the scheduled rates by way of freight
etc. there can be no objection in arranging the booking through booking agents. However
this matter can be decided by the Railway Administrations themselves keeping in view the
Ministry of Finance's instructions of engaging only Air India flights while air-freighting the
cargo.


                                                                      Yours sincerely,
                                                                          Sd/-
                                                                     (E. V. Viswanathan)
                                  ANNEXURE IV/1-09

                              GOVERNMENT OF INDIA
                              MINISTRY OF RAILWAYS
                                (RAILWAY BOARD)


No. 77/RSF/794                                          New Delhi, dated 5th August 1982

The General Managers,
All Indian Railways including
Production Units & D. G. / R. D. S. O., Lucknow.

The General Managers,
Wheel & Axle Plant, Bangalore,
M.T. Projects (Railways), New Delhi/Bombay/ Madras/Calcutta.


       Sub: Government Departments/Public Sector Projects/Undertakings contracting
            on F. O. B./ F. A. S. Imports and C. & F. C. I. F. Exports-Shipping
            arrangements through the Ministry of Shipping & Transport --Procedure
            regarding.

     A copy of O. M. No. CW/25/ASO II(1)72 dated 5th June, 1982 received from Ministry
of Shipping and Transport, New Delhi on the above noted subject is forwarded herewith for
information and guidance compliance of instructions contained therein may please be
ensured.

    Receipt of the letter may please be acknowledged.

                                                                      Sd/-
                                                               (A. K. MALHOTRA)
                                                        Addl. Director, Railway Stores (F),
                                                                Railway Board.
                            GOVERNMENT OF INDIA
                     MINISTRY OF SHIPPING AND TRANSPORT
                             (CHARTERING WING)

No. CW / 25-ASO. II (1)/72.                                  New Delhi, dated 8th June 1982.

                                 OFFICE MEMORANDUM

      Sub:- Government Departments / Public Sector Projects / Undertaking
            Contracting on F. O. B. / F. A. S. Imports and C. & F./ C. I. F. Exports--
            Shipping arrangements through the Ministry of Shipping and Transport
            (Chartering Wing)--Procedure regarding.

         The undersigned is directed to say that as per Government of India's Agreement with
the India-Pakistan-Bangladesh Conferences covering the trade from U.K. / Continent to
India, shipments against F. O. B. / F. A. S. contracts are required to be arranged through the
Government of India's Forwarding Agents. Previously there used to be inter-sea pooling
arrangement amongst the member lines of the said conferences in accordance with which
specified percentage of cargoes / freight earnings were shared by the Indian member lines but
the same was abolished with effect from 1st April, 1981. After abolition of the pooling
system each member lines is free to secure maximum cargo for their vessels without any
limitation and consequently there has been stiff competition amongst the member lines to
secure maximum cargo for their vessels individually. Moreover, each country may be
anxious to allocate maximum cargo to their own national lines. With a view to ensure that
shipment of cargoes from U.K./ Continent against C. & F. / C. I. F. / F. O. R. / Turnkey
contracts is arranged by Conference Lines’ vessels and Indian member lines vessels’ are also
utilised where ever available, it has already been suggested in this Ministry's Office
Memorandum of oven number dated 4th December 1981 that the following additional clause
may be stipulated in the C. & F. /
C. I. F. /F. O. R. / Turnkey contracts for imports from U. K. /Continent: --

     " The sellers should arrange shipment through the Government of India's Forwarding
Agents M/s. Schenker & Co., 2000 Hamburg (Cable ‘ SCHENKERCO ' Hamburg) or obtain
a certificate from them to the effect that shipment has been arranged in accordance with
instructions of the Ministry of Shipping and Transport (TRANSCHART), New Delhi”

2. In this connection M/s. Schenker & Co., Hamburg, who are Government of India's
Forwarding Agent for handling shipments from U. K./ Continent, have pointed out that even
in case of F. O. B. contracts, some of the suppliers are arranging shipment themselves
directly instead of routing shipments through them, in violation of the prescribed procedure.
As the Indian Shipping Industry along with the world shipping, has been passing through a
prolonged recession and there has been no appreciable improvement in the world freight
market so far it has become all the more necessary that all possible efforts are made to
arrange shipment by Indian flag vessel to the maximum extent possible. It is therefore
requested that the following procedure may be followed by all concerned scrupulously: ~
       (i) As per general policy of Government, contracts for imports from abroad may be
       finalised on F.O.B. / F. A. S. basis and those for export from India on C. & F. / C.I.F.
       basis and prior concurrence obtained from the Ministry of Shipping & Transport
       (Chartering Wing) (TRANSCHART) before making any departure therefrom.
       (ii) A set of specimen shipping clauses to be incorporated in the various types of
       contracts for imports and exports of general liner and bulk cargoes is enclosed for
       guidance. It may please be ensured that the prescribed shipping clause is incorporated
       in the contracts.

      (iii) With a view to ensure compliance of the shipping clause incorporated in the
      contracts, the following stipulation may also be made in the letters of credit relating to
      imports from U. K. including Northern Ireland (also Eire), the Northern continent of
      Europe (West Germany, Holland, Belgium, France, Norway, Sweden, Denmark,
      Finland and from the French and Western Italian Ports of the continental sea board of
      Mediterranean an Adriatic ports: -

       " L/C negotiable against production of complete set of clean Bill of Lading etc.....
And certificate by M / s. Schenker & Co., G.M.B.H., Hamburg or their accredited local load
port agents certifying that shipment has been arranged in accordance with the instruction of
the Ministry of Shipping and Transport (Chartering Wing) (TRANSCHART), New Delhi ".

3. All possible efforts are made by 'TRANSCHART' to arrange shipment as per delivery
schedule mentioned in the contracts. However, keeping in view the position explained
above, the Projects / Undertakings etc. are requested to bear with some delay of about 15/20
days which may at times be caused to enable utilisation of space on Indian vessels.

4. It is requested that the above may kindly be brought to the notice of the entire Public
Sector Undertakings Projects /Purchasing Selling Organisations under the administrative
control of the Ministries / Departments concerned and they may be advised to follow the
prescribed procedure for arranging shipments of their cargoes through Chartering Wing
(TRANSCHART) of this Ministry and incorporate the prescribed shipping clause in the
contracts and also make Necessary stipulation in the letters of credit as indicated above.
They may also be advised to send two copies each of all the contracts, whether F. O. B. /F.
A. S. or C. & F./ C. I. F/   F. O. R. / Turnkey in respect of both imports as well as exports
along with cargo particulars in the prescribed proforma (copy enclosed) in duplicate to this
Ministry as soon as the same are finalised, for taking further necessary action with regard to
shipping arrangements.

    A copy of the instructions issued may also be endorsed to this Ministry.


                                                                              Sd/-
                                                                       (B. S. NARULA)
                                                              Shipping Co-ordination Officer.
                                                                       Telephone: 384250.
       SPECIMEN SHIPPING CLAUSE FOR GENERAL LINER CARGOES --
                   IMPORTS FROM ABROAD TO INDIA

(A) F. O. B. / F. A. S. Contracts --- Shipping arrangements will be made by the Ministry of
Shipping and Transport (Chartering Wing), New Delhi (Cable: TRANSCHART, New Delhi,
Telex: VAHAN ND 2312, 2448 and 3104) through their respective Forwarding Agents
Nominees as mentioned below to whom adequate notice about the readiness of each
consignment should be given by the Sellers from time-to-time at least six weeks in advance
of the required position for finalising the shipping arrangements.

                     Area                       Forwarding Agents / Nominee
    (a) U.K. including Northern Ireland (also   M/s. Schenker & Company; GMBH 2000
 Eire) , the North continent of Europe (West    Hamburg-11, P. O. B. No. 110320 (Cable
 Germany, Holland, Belgium, France,             SCHENKER CO, Hamburg) Telex:
 Norway, Sweden, Finland and Denmark) and       217004-307 SHD- 212675 Telephone No.
 ports on the continent Sea-Board of the        040/361351.
 Mediterranean (i.e. French and Western
 Italian Ports) and also Adriatic Ports.
 (b). U. S. A. and Canada.                      M/s. Tyson Shipping Co., Inc., One world
                                                Trade Centre-Suite No. 1933 New York. N
                                                Y10048, U.S.A. (Cable DYSONCO, New
                                                York Telex: DYSONCO 62212
                                                Telephone No. (212) 775- 1100.
 (c) Japan                                      The first Secretary (Commercial)
                                                Embassy of India, Tokyo, Japan
                                                (Cable : INDEMBASSY Tokyo)
                                                Telex : INDEMBASSY J.24850
                                                Telephone No, 262-2391
 (d) Australia, Algeria, Bulgaria, Romania,     The Shipping Corporation of India Ltd.,
 Czechoslovakia, Egypt, G. D. R.                “Shipping House” 245, Madame Cama
                                                Road Bombay-400 021 (Cable:
                                                SHIPINDIA, Bombay) Telex : 31 2209
                                                SCIDIN Telephone No. 232666
                                                232785
 (e) U. S. S. R.                                The Secretaries, Indo-Soviet Shipping
                                                Service C/o The Shipping Corporation of
                                                India Ltd., "Shipping House" 245 Madame
                                                Cama Road, Bombay-400 021 (Cable
                                                SHIPINDIA Bombay for SOVINDSHIP)
                                                Telex: 31 2209 SCID IN) Telephone No.
                                                232666
 (f) Poland                                     The Secretaries, Indo-Polish Shipping
                                                Service C/o. The Shipping Corporation of
                                                India Ltd., “ Shipping House" 245
                                                Madame Cama Road. Bombay-400 021
                                                (Cable: SHIPINDIA, Bombay for
                                                INDOPOL) Telex 31 2209 SCID IN
                                                Telephone: 232666.
 (g) Pakistan                                   The Mogul-Oline Ltd., 169 Bank Street,
                                                Fort, Bombay-400 023 (Cable : MOGUL
                                                Bombay) Telex: 011 4049(MOGUL),
                                                Telephone: 252785.
 (h) Other areas not specifically mentioned     The Shipping Co-ordination Officer,
 above                                          Ministry of Shipping and Transport
                                                ( Chartering Wing) New Delhi
                                                (Cable: TRANSCHART, New Delhi),
                                                Telex: VAHAN ND 2312, 2448 and 3104.

         The following additional provision should also be made in the contracts in respect
of import from the under mentioned areas, respectively.

(i) Shipment from Australia, Algeria, Bulgaria, Romania, Czechoslovakia, Egypt and
G.D.R.

          A copy of the notice about the readiness of each consignment given by the Sellers
to the Shipping Corporation of India Bombay, should also be endorsed to the Shipping Co-
ordination Officer, Ministry of Shipping and Transport (Chartering Wing), New Delhi
(Cable: TRANSCHART, New Delhi, Telex: VAHAN ND 2312, 2448 and 3104).

(ii) Shipments from U. S. S. R. - Shipment under this contract should be made in accordance
with the Agreement between the Government of the Republic of India and the Government of
the U. S. S. R. on Merchant Shipping, 1976 as amended up-to-date, by vessels of Indo-Soviet
Shipping Service.

(iii) Shipments from Poland - Shipment under this contract would be made by the National
Flag lines of the two parties and vessels of third Flag Conference Lines, in accordance with
the agreement between the Government of the Republic of India and the Government of
Polish People's Republic regarding Shipping Co-operation dated 27th June 1960 as amended
up-to-date.

(iv) Shipments from Czechoslovakia –“ Goods under this contract would be shipped by the
National Flag Lines of the two parties and vessels of the Third Flag Conference Lines, in
accordance with the agreement on co-operation in Shipping between India and
Czechoslovakia signed on 3rd November 1978 and ratified on 29th December 1979 ", as
amended up-to-date.
       SPECIMEN SHIPPING CLAUSE FOR GENERAL LINER CARGOES -
                  IMPORTS FROM ABROAD TO INDIA

(B). C. & F. / C. I. F / F. O. R. / Turnkey Contracts - (a) Shipments from Ports U.K.
including Northern Ireland (also Eire) from the North continent of Europe (West Germany,
Holland, Belgium, France, Norway, Sweden, Denmark, Finland and Ports of the continental
sea board of the Mediterranean (i. e. French and Western Italian Ports), to Ports in India--The
seller should arrange shipment of the goods by vessels belonging to the member lines of the
India—Pakistan--Bangladesh Conferences. If the seller finds that the space on the
Conference lines, vessels is not available for any specific shipment, he should take up with
India--Pakistan--Bangladesh Conferences, Conformity House, East Grinstead, Sussex (U. K),
for providing shipping space and also inform the Shipping Co-ordination Officer. Ministry
of Shipping and Transport, New Delhi (Cable: TRANSCHART, New Delhi, Telex: VAHAN
ND, 2312, 2448, 3104).

           The sellers should arrange shipment through the Government of India's
forwarding Agents, M/s. Schenker & Co., 2000 - Hamburg (Cable: SCHENKERCO
Hamburg) or obtain a 'certificate from them to the effect that shipment has been arranged in
accordance with instruction of the Ministry of Shipping and Transport (TRANSCHART),
New Delhi.

(b) Shipments from (Rostock) G. D. R. - Goods under this contract would be shipped by the
national shipping companies of the Contracting Parties operating bilateral shipping service
and vessels under the flag of third countries in accordance with the Agreement between the
Government of German Democratic Republic and the Government of the Republic of India in
the Field of Merchant shipping signed on 9th January 1979, as amended up-to-date,

          If the sellers find that the space on the Conference Lines vessels, is not available
for any particular consignment he should take up with India-Pakistan-Bangladesh
Conferences, Conformity House, East Grinstead. Sussex U.K., for providing shipping space
and also inform the Shipping Co-ordination Officer, Ministry of Shipping and Transport
(Chartering Wing), New Delhi (Cable: TRANSCHART, New Delhi, Telex: VAHAN ND.
2312, 2448, and 3104).

(c) Shipments from Adriatic Ports of Eastern Italy and Yugoslavia. - The seller should
arrange shipment of the goods by vessels belonging to the following Indian member lines: --
       (1)     The Shipping Corporation of India Ltd.
       (2)     Scindia Steam Navigation Co. Ltd.
       (3)     India Steamship Co. Ltd.
2. The Bills of Lading should be drawn so as to show: --
       Shippers       The Government of India.
       Consignee      Government Department, Undertaking or Project concerned or
                      Director of Supplies and Disposals Embarkation Commandant (as the
                      case may be).
   (The name and address of the Port Consignee and ultimate consignee should be indicated)
3. Two non-negotiable copies of the Bills of Lading indicating the freight amount and
Discount, if any allowed should be forwarded to the Shipping Co-ordination Officer,
Ministry of Shipping and Transport (Chartering Wing), Parivahan Bhavan, New Delhi after
the shipment of each consignment is effected.

       For the purpose of ascertaining the availability of suitable Indian vessels and granting
dispensation in the event of their non-availability the Seller should give adequate notice about
the readiness of each consignment from time-to-time at least six weeks In advance of the
required position to M/s. Schenker & Co., 2000 Hamburg (Cable: SCHENKERCO,
Hamburg) and also endorse a copy there of to the Shipping Co-ordination Officer, Ministry
of Shipping and Transport, New Delhi (Cable: TRANSCHART, New Delhi, Telex: VAHAN
ND. 2312/2448/3104).

        The Seller should arrange shipment through the Government of India's Forwarding
Agents, M/s. Schenker & Co., Hamburg (Cable: SCHENKERCO. Hamburg) or obtain
certificate from them to the effect that shipment has been arranged in accordance with the
instructions of the Ministry of Shipping & Transport (TRANSCHART), New Delhi.

(d). Shipments from Poland and Czechoslovakia: --

1. (i) Imports from Poland.- Shipments under this contract would be made by the National
flag lines of the two parties and vessels of third flag conference lines, in accordance with the
agreement between the Government of the Republic of India and the Government of the
Polish Peoples' Republic regarding Shipping Co-operation dated 27th June 1960 as amended
up-to-date.

1. (ii) Imports from Czechoslovakia.-- " Goods under this contract would be shipped by the
National flag lines of the two Parties and vessels of the third flag conference lines, in
accordance with the Agreement on co-operation in shipping between India and
Czechoslovakia signed on 3rd November 1978 and ratified on 19th December 1979", as
amended up to date.

2. Shipping arrangements should be made by the Sellers in consultation with the Resident
Representative of the Indian Shipping Lines in Gdynia, C/o. Morska Ageneja Gdyni, Gdyni,
Pulaskiegoul 8, P.O. Box. 246, Gdynia (Poland) Telex: MAG. PL 054301, Telephone:
207621), to whom details regarding contract number, nature of cargo, quantity, port of
loading/discharging, name of Government consignee, expected date of readiness of each
consignment etc., should be furnished at least six weeks in advance of the required position,
with a copy thereof endorsed to the shipping Co-ordination Officer, Ministry of Shipping &
Transport (Chartering Wing) New Delhi (Cable: TRANSCHART, New Delhi Telex
VAHAN, ND. 2312,2448 AND 3104).

(e) Shipments from U. S. S. R. - Shipment under this contract should be made in
accordance with the Agreement between the Government of the Republic of India and the
Government of the U. S. S. R. on Merchant Shipping, 1976, as amended up-to-date, by
vessels of Indo-Soviet shipping service.
(f) Shipments from Japan. - The shipment of goods should be made by Indian vessels to the
maximum extent possible subject to a minimum of 50 per cent.

       The Seller should arrange shipment of the goods in consultation with the Embassy of
India in Japan, Tokyo to whom details regarding contract number, nature of cargo, quantity,
port of loading/discharge, name of the Government consignee, expected date of readiness of
each consignment etc should be furnished at least six weeks in advance of the required
position.

    Note.-The copies of such contracts are to be endorsed both to the Attaché (Commercial),
Embassy of India in Japan, Tokyo and the Shipping Co-ordination Officer, Ministry of
Shipping and Transport, New Delhi.

(g) Shipments from Australia, Algeria, Bulgaria, Romania, Egypt. -The seller shall
arrange shipment of the goods by Indian flag vessels to the maximum extent possible subject
to a minimum of 50 per cent for the purpose of ascertaining the availability of suitable Indian
vessels, the seller shall give adequate notice of not less than six weeks about the readiness of
each consignment to the Shipping corporation of India Ltd., Shipping House, 245, Madame
Cama Road, Bombay - 400 021 (Cable: SHIPINDIA Bombay) and also endorse a copy
thereof to the Shipping Co-ordination Officer, Ministry of Shipping and Transport, New
Delhi (Cable : TRANSCHART, New Delhi, Telex : VAHAN ND-2312, 2448 3104).

(h) Shipment from Pakistan - The shipment of cargoes should be made by Indian vessels to
the maximum extent possible subject to a minimum of 50 per cent.

          Shipping arrangements should be made by the Sellers in consultation with M/s.
Mogul Line Ltd., 16-Bank Street, Fort, Bombay 400 023 (Cable: MOGUL Bombay, Tel: 011
4049 Mogul), to whom details regarding contract number, nature of cargo, quantity, port of
loading/discharging, name of the Government Consignee, expected date of readiness of each
consignment etc., should be furnished at least Six Weeks in advance of the required
position, with a copy thereof endorsed to the Shipping Co-ordination Officer, Ministry of
Shipping & Transport (Chartering wing), New Delhi (Cable: TRANSCHART, New Delhi,
Telex VAHAN ND-2312. 2448 & 3104).

(i) Shipments from U. S. Atlantic & Gulf Ports. -The seller should arrange shipment of the
goods by vessel belonging to the member Lines of the India, Pakistan, Bangladesh, Ceylon
and Burma Outward Freight Conference. If the seller finds that the space on the Conference
Lines, vessels is not available for any specific shipment, he should take up with India-
Pakistan-Bangladesh-Ceylon & Burma Outward Freight Conference, 19, Rector Street, New
York, N. Y. 10006 U. S. A. for providing shipping space and also inform the Shipping Co-
ordination Officer, Ministry of Shipping and Transport, New Delhi (Cable: TRANSCHART,
New Delhi Telex: VAHAN, ND-2312, 2448 and 3104).

(j) Shipment from St. Lawrence and Eastern Canadian Ports. -The seller should arrange
shipment of the goods by vessels belonging to the following shipping Lines: -

                   (1) The Shipping Corporation of India Ltd.

                   (2) The Scindia Steam Navigation Co. Ltd.
       If the seller find that the space on the vessels of these Lines is not available for any
particular consignment he should inform the Shipping Co-ordination Officer. Ministry of
Shipping and Transport, New Delhi (Cable: TRANSCHART: New Delhi Telex: VAHAN
ND-2312, 2448 and 3104) immediately so that dispensation from the Shipping Lines
concerned to use alternative Lifting may be sought.

(k). Shipments from West Coast Ports of U. S. A. Canada and other Areas not
specifically mentioned above. - The seller should arrange shipment of the goods by Indian
vessels to the maximum extent possible subject to a minimum of 50 per cent. For the
purpose of ascertaining the availability of suitable Indian vessel and granting dispensation in
the event of their non-availability, the seller should furnish the details regarding contract
number, nature of cargo. Quantity, port of loading/discharge, name of the Government
consignee cargo, quantity, port of loading/discharge, name of the Government consigned and
expected date of readiness of each consignment etc. to the Shipping Co-ordination Officer,
Ministry of Shipping and Transport, New Delhi (Cable: TRANS-CHART: New Delhi, Telex:
VAHAN ND-2312. 2448 and 3104) at least Six weeks in advance of the required position.

2. Bills of Lading.

(i) C. I. F. / C & F/ Turnkey Shipment. -The Bills of lading should be drawn to indicate the
‘Shipper’ Consignee as under:

Shipper: - The C. I. F. /C &F/ TURNKEY Suppliers concerned.

Consignee: -The Government of India, Government Department undertaking or project
concerned or Director of Supplies & Disposals. Embarkation Commandant (as the case may
be).

(ii). F.O.R. Shipment: --The Bills of Lading should be drawn to indicate 'shipper' and
'Consignee' as under:

Shipper: - The F. O. R. suppliers concerned.

Consignee: -Supplier's Indian Agents or order.

Note - More ever the ‘Government of India', Government Department, Undertakings or
Project concerned, Director of Supplies and Disposals/Embarkation Commandant (as the case
may be) should appear in the, body of the Bills of Lading as “Ultimate Consignee" or as the
‘Notify Party' or in the mark.

3. Two non-negotiable cc pies of the Bills of Lading indicating the freight amount and
discount, if any allowed, should be forwarded to the Shipping Co-ordination Officer,
Ministry of Shipping and Transport (Chartering wing), New Delhi after the shipment of each
consignment is affected.

4. The sellers should avoid the use of over aged vessels for the shipment of the goods under
the contract and if so used the cost of additional insurance, if any shall be borne by the
sellers.
Notes for guidance: -

       (i) Either the entire specimen may be attached as Annexure to the contract or the
relevant portion relating to the respective area, may be incorporated in the contract.

       (ii) In case of contracts financed under any Loan Agreement e.g. U. S. AID EXIM
Bank/I. D. A. or other credits, additional clause may be incorporated indicating the
requirements relating to shipment as per terms of the respective loan Agreement.

       (iii) As per general policy of Government to buy F. O. B. & sell C. & F. contracts for
imports from abroad to India are to be finalised on F. O. B. /F. A. S. basis and those for
exports from India to abroad on C & F/C. I. F. basis and prior approval is required to be
obtained from the Ministry of Shipping & Transport (Chartering wing), New Delhi before
making departure therefrom.

        (iv) Two copies each of all contracts for imports as well as exports on Government
account whether on F. O. B/F.A.S. or C. & F. /C. I. F. /F. O. R. /TURNKEY basis, along
with cargo particular in the prescribed pro-forma (in duplicate) should be sent to the Shipping
Co-ordination Officer, Ministry of Shipping & Transport (Chartering wing), New Delhi, as
soon as the contracts are finalised.

Specimen shipping Clause for General Liner Cargoes Exports from India to Abroad. -

(C) C&F / C.I.F. Contract: - Shipping arrangement will be made by the Shipping Co-
ordination Officer, Ministry of Shipping and Transport (Chartering wing), New Delhi (Cable:
TRANSCHART, New Delhi), Telex: VAHAN ND-2312, 3104,2448 to whom adequate
notice about the readiness of each consignment should be given by the sellers from time-to-
time at least Six weeks in advance if the required position for finalising the shipping
arrangements.

(D). F.O.B. / F. A. S. Contracts: --The Buyer should arrange shipment of the goods by
Indian vessels to the maximum extent possible subject to a minimum of 50 percent in
consultation with the Shipping Co-ordination Officer. Ministry of Shipping and Transport
(Chartering wing), New Delhi, Cable: TRANSCHART, New Delhi, Telex: VAHAN ND-
2312/3104/2448 to whom adequate notice about the readiness of each consignment should be
given from time-to-time at least Six weeks in advance of the required position for
ascertaining the availability of suitable Indian vessels or granting dispensation in the event of
their non-availability.
               SPECIMEN SHIPPING CLAUSE FOR BULK CARGOES

(E) F.O.B. /F. A. S. Contracts for imports and C. & F. /C. I. F. Contract for exports
from India: - Shipping arrangement will be made by -the Chief Controller of Chartering,
ministry of Shipping & Transport (Chartering wing), New Delhi (Cable: TRANSCHART,
New Delhi), Telex: VARAN ND-2312, 3104/2448.

       Thereafter the usual terms relating to load/discharge rate, demurrage/despatch, notices
to be given etc., and other conditions, if any, as may be required and agreed to by other
contracting party, should be incorporated in the contract).

(F) C&F /C. I. F. Contracts for imports from abroad and F. O. B. /F. A. S contract for
exports from India. At least 50 per cent of the quantity under this contract will be shipped
by Indian vessels in consultation with the Chief Controller of Chartering, Ministry of -
Shipping and Transport (Charting wing), New Delhi (Cable: TRANSCHART, New Delhi),
Telex: VAHAN ND-2312/3104/2448, adequate notice about the readiness of each
consignment should be given from time-to-time (at least Six weeks in advance of the
required position) to the Chief Controller of Chartering, New Delhi for ascertaining
availability of Indian vessels or for granting dispensation to use non-Indian vessels in the
event of non-availability of Indian vessels. A minimum of three clear working days 'notice'
indicating the nature quantity and expected date of readiness of cargo, suitable lay days and
other conditions if any, date and time by which the offer for shipping space is required should
be given to the Chief Controller of Chartering, Ministry of Shipping and Transport,
Chartering wing, New Delhi for circulating the enquiry to the Indian shipping companies
concerned to enable them to or shipping space.
       MINISTRY OF SHIPPING AND TRANSPORT (CHARTERING WING)
                      (TRANSCHART), NEW DELHI

               (Cargo particulars in respect of Imports from U.S.A. and Canada)

1. Name of U.S./Canadian suppliers with Postal/Telegraphic Address………………………
2. Contract number and date, date to be spelled in words specially month to avoid
misunderstanding ………………………………..
3. Full Designation and Postal/Telegraphic address of the Port Consignee and Ultimate
Consignee………………………...
4. Brief Description of Cargo …. ….          ….        …..
5. Delivery Date ...   ….     ….       …          ….     ….
6. Port of Shipment    ….     ….       ….       ….       ….
7. Port of discharge   ….     ….       ….       ….       ….
8. Terms of delivery (The terms F. O. B. is generally interpreted in U.S.A. as F.O.B. loading
point (i.e. Works/Factory or Ware house which are located in the interior). If delivery is
basis F.O.B. Plant/Works, Dollar and is necessary to cover Inland freight payment up to
F.A.S. vessel port of shipment. Also, F.A.S. West Coast and Gulf Ports involve additional
charges towards wharfage and handling, where handling is involved, to be paid in Dollars. If
payment by L/C is established by importers, whether such charges have been provided in
L/C, should be indicated.)………………………………….
9. Source of Fund, i.. e. free foreign currency or loan. If former, indicate foreign exchange
sanction No. and date. In case of later, Loan number should be indicated……………….
10. Paying authority, how the cost of goods etc. will be reimbursed, whether through C.A.O. ,
Embassy of India, Washington D.C. or by L/C to be arranged by Importer. The name of
Accounts Officer in India and head of Account in the former case, to be indicated.
11. Whether Transit/Marine Insurance is required/arranged………………………..
 (Insurance required or not required to be clearly stated).
12. If payment of freight to U. S. Flag involved (i .e AID./ D.L.F./ EXIM. Loans required 60
per cent by U. S. Flag) and whether Dollar Fund has been made available to C.A.O. Embassy
of India, Washington. If so, details to be given.
13. Import Licence number and validity date, if import licence (in India) is required.
14. Flag requirements, if any, to be indicated … … …
15. If Export Licence required, where her suppliers advised to apply in the name of
Commerce and Supply Wing, Embassy of India. Washington D. C. and submit application to
them.
Note.-This form should be filled in and sent (in duplicate) to the Shipping Co-ordination
Officer, Ministry of Shipping and Transport(Chartering Wing), Parivahan Bhavan, New
Delhi as soon as the relevant contract is finalised.
         MINISTRY OF SHIPPING AND TRANSPORT (CHARTERING WING)
                              (TRANSCHART)

    Particulars of Cargoes for which Shipping space is required to be arranged by the
           Ministry of Shipping and Transport (Chartering Wing) on behalf of
                       Ministry/ Department /Project/ Undertaking


Name of the   Name of the        Particulars of Cargo                                 Period                                                                             Any




                                                                                                                                Nature F. A. S./ of contract F. F.
                                                                                                                                 A. S./ 0. B./ F. A. S./ or C&F./
 supplier      Consignee                                                               over                                                                             special




                                                       Cargo availability whether




                                                                                                                                     C.I.F./F.O.R. Turnkey
    with          with                                                                which                                                                          conditions




                                                        shipload or parcel if the
                                                          latter size of parcels
Telegraphic   Telegraphic/                                                           shipment                                                                           in that




                                                                                                               Discharge Port
                                                                                                Loading Port
  / Postal       Postal                                                                to be                                                                           contract
                              Description

                                            Quantity
  address       address                                                             completed                                                                        relating to
                                                                                                                                                                      shipment




     1              2             3             4                5                     6               7               8                     9                           10




 (1). This form should be filled in and sent (in duplicate) to the Chief Controller of chartering
 (in respect of bulk cargoes) and to the Shipping Co-ordination Officer (in respect of general
 liner cargoes) Ministry of Shipping and Transport (Chartering Wing), New Delhi together
 with two copies of the Purchase/Sale Contract as soon as the relevant contract is finalised.

 (2) This Proforma is for all contracts for imports and exports (except those for imports from
 U.S.A. and Canada).

 (3) In case of import of general liner cargoes from Japan, the cargo particulars proforma
 should be sent in quadruplicate and in respect of C.F./C.I.F./F.O.R./Turnkey contracts for
 import from U.K. Continent in quintuplicate.
                                   ANNEXURE IV/1-10

                           GOVERNMENT OF INDIA
                  MINISTRY OF RAILWAYS / (RAILWAY BOARD)

No. 82/F (F. Ex.) 24. 1/CLW/11                        New Delhi, dated 16th November 1982

The General Managers,
All Indian Railways including P. Units,

            Sub: Quotation of Agency Commission in respect of imported Goods

           The question of laying down limits for the Agency Commission payable to the
Indian agents of foreign firms in respect of imported stores has been under the consideration
of the Board for some time. The Ministry of Finance have also pointed out that the payment
of an Agency Commission beyond 5 percent, as a normal course should be discouraged.

           The Board have accordingly decided that in all cases of imported goods the
quantum of Agency Commission should be determined carefully with reference to the nature
of the imported stores, Country of origin etc. In cases, where the Commission appears to be
on the high side, the specific question of reduction of the percentage of commission quoted
and consequently the F.O.B. price of the contract should be taken up with the firm.
Negotiations may also be held with the firm for the purpose, if and where considered
necessary. In cases where the agency commission exceeds 5 per cent and it is not possible to
bring it down further, specific approval of the General Manager with the concurrence of the
F. A. & C. A. O. should be obtained before the tender is finally decided and the purchase
order placed on the firm. In all such cases i. e. where Agency Commission exceeding 5 per
cent has been accepted, specific reasons for the higher percentage should be clearly indicated
in the application for release of foreign exchange made to the Board.

                 The receipt of this letter may please be acknowledged.

                                                                             Sd/-
                                                                  (R. KRISHNAMURTHY)
                                                            Jt. Director, Railway Stores (P)
                                                                       Railway Board
                                     ANNEXURE IV/1-11

Copy of Board’s letters No. 83/F (FEX)/3/1 dated 26th October 1983 addressed to General
Managers, A11 Indian Railways and others.

       Sub: Delays in finalisation of Tenders involving Foreign exchange

        Instance of undue delay in finalisation of Tenders particularly those of high value
have come to the notice of the Board. Besides World/ Bank/ Department of Economic
Affairs have also had occasion to point out that, in some of the cases sent to them recently,
abnormally long time had been taken in finalisation of Tenders by the Tender Committee and
subsequent approval of their recommendation by the competent authority.

2. As you are aware, delays in finalisation of Tenders lead to various complications viz. inter-
alia.

        (i) Non-utilisation of Foreign exchange earmarked for meeting requirement of imports
during a particular period. In view of difficult balance of payments position it is necessary
that the Foreign Exchange allotments are utilised judiciously and quickly to avoid the need
for import at a latter stage at a higher cost.

        (ii) Comparative position of offers may change due to the fluctuation in exchange
rates leading to complications in their evaluation; and

       (iii) Firm may not agree to extend validity of their offer and/or offer revised bids /
quotations.

3. Board have expressed concern at such delays and have desired that immediate action
should be taken by all concerned to ensure that the Tenders are processed and finalised very
early and within the validity period of the offers so that the procurement process is completed
as expeditiously as possible.


                                      **********
                               ANNEXURE IV/1-12

      Copy of Board’s letter No. 84/F (F. EX) 5/2 dated 15/21st August 1984 addressed to
General Managers All Zonal Railways and others.

               Sub: Airlifting of Railway Stores-Need to restrict.

        While considering a case for permission to airlift certain Railway Stores initiated by a
Production Unit, Board have observed their airlifting is indicative of slowliness and delayed
or belated thinking. The need for airlifting can be avoided if timely action is taken for the
Procurement of supplies and the case is adequately chased to finality. Board has also stressed
the need for review of critical items of Stores and prompt initiation of procurement action to
ensure that such Stores are available when required.

2. In the above context Board desires that Railways take adequate and prompt action for
timely procurement of Stores and thereby avoid the need for their airlifting. In case airlifting
becomes inescapable for any reason in any particular case, complete justification for the same
bringing out, Inter alia, the following.

       (i)     Reason/circumstances in which the item could not be procured earlier and
               airlifting has become inescapable.

       (ii)     In case of delay in initiation of procurement action or its finalisation, whether
               responsibility can be fixed, and if so action taken/proposed to be taken for the
               same.

       (iii)   Remedial action taken to avoid such delays in future, may please be furnishing
               while referring the case to Board for obtaining permission to airlifting the
               item.

3. The above instructions would not apply to items which necessarily have to be airlifting on
account of their having short shelf life or on account of their being delicate/ sophisticated
items or items considered too small for transportation by sea and would need to be airlifted in
the normal circumstances.



                                       *********
                              ANNEXURE IV/1-13

Copy of Board’s letter No. 82/F(F.E.X) 1/1 dated 12th January, 1986 addressed to General
Manager Southern Railway, Madras and All Indian Railways, Production Units and others.

        Sub: Delegation of enhanced powers for release of Foreign exchange.

        The powers for release of Foreign exchange were delegated to the General Managers
in terms of this office letter of even no dated 4th June 1985. As necessity for more delegation
of powers to the General Managers was felt, the case has since been further reviewed. As a
result of this review, it has been now decided to further enhance powers to the General
Managers for release of Foreign exchange as indicated below: --

 Sl.            Item                             Delegation of powers,
 No.                                  Present powers             Proposed powers

 1     Release of foreign Rs 1 lakh in each case (on           Rs. 10 Lakhs in each case (on
       exchange       from C.I.F. basis subject to a           C.I.F. basis subject to a
       free resources      ceiling limit of Rs. 10 Lakhs       ceiling of Rs. 1 crore
                           per year.                           annually.

1.1 These powers are to be exercised personally by the General Manager with the personal
concurrence of his F. A. & C. A. O. as already stipulated in the extant orders. The other
conditions also viz that the proposal has been cleared from the indigenous angle wherever
required etc. will continue to apply. The stipulations contained in Paras 2.1 and 3 of this
office letter of even No dated 4th June 1985 will also continue to be applicable and their
implementations may please be ensured.

       In terms of powers earlier delegated to the General Managers funds have already been
placed at the disposal of each Railway/Units.

        In order to enable release of additional funds in view of the liberalised delegation now
agreed to, the Zonal Railway/ Production Units etc., are requested to indicate their
requirement during the current financial year. Based upon their indication further funds will
be allocated to the individual units.



                                         **********
                                       ANNEXURE IV/1-14

Copy of Board's letter No. 84/Dev. Cell/ILMI/Policy dated 11th February 1986 addressed to
General Managers All Indian Railways and others.

               Sub: Import by Railways - D. G. T. D’s Clearance

       D.G.T.D's clearance is required for import of all items falling under Import and
Export Policy and Deptt of Electronics Clearance is required for import of any electronic
items having a. c. i. f. value of Rs. 5.00 lakhs -or / more. The requests received from Zonal
Railways and Production Units for these clearances are processed by Development
Directorate of the Railway Board.

2. Clearance of above-mentioned items for imports from indigenous angle requires
discussions with DGTD , Deptt of Electronics for evaluating the alternatives available in the
Country. For a meaningful discussion and presentation of the case of the Zonal Railway/
Production Units to the D.G.T.D, Deptt of Electronics in proper perspective the
Development, Directorate requires full details like Specifications of the item to be imported,
Catalogue Nos. with Technical literature, efforts made to get the supply from indigenous
sources including development of indigenous sources etc. For quite sometime, it has been
observed that the import proposals received from Railway/Production Units for obtaining D.
G. T. D. Deptt. of Electronics Clearance are not supported by full details and justification.
Moreover, in most of the cases Development Directorate is not approached before initiating
action for imports but the requests for getting this clearance and release of Foreign Exchange
are made simultaneously. As a matter of principle, the D. G. T. D. clearance should precede
release of foreign Exchange.

3.   All such requests should be invariably accompanied with following information:

         (a) The proposal should be scrutinised as per current Import-Export Policy and a list
of items in six copies requiring D. G. T. D. clearance only should be sent to this office
indicating items number and Appendix No. of the Policy under which these are appearing.

Note: - It is seen that Railway/PUs sometimes send long lists containing restricted (under
Appendix 2,3,8, and 10 of I & E Policy) as well as unrestricted (under OGL) items without
scrutiny. Such mixed lists will not be entertained by this office for processing.
.
        (b)Attempts made to procure the material from indigenous sources and the results
thereof endorsing original/copies of letters of regret in case of negative response.

       (c) Full justification in regard to the material intended to be imported, indicating
unsuitability of alternate Indian make material along with end use of the items to be imported
with their Catalogue and/or Technical Specification.

        (d) Detailed justification for the quantity, indicating Annual Offtake.

        (e) Mode of Tendering and the Source of Financing.
        (f) In case of spares, Break-up of prices and comparison between cost of spares vis-à-
vis cost of complete equipment.

       (g) Total approximate cost of the import, both in Rupees and Foreign Currency.

        In case, the items required to be imported are needed after more than Two Years, full
Justification as to why such advance action is necessary.

4. In this connection it is advised that request for D.G.T.D./ Deptt of Electronics Clearance
along with all relevant information should be made at least 3 months in advance of initiating
action for imports, as this is the minimum time required for processing the cases with these
Agencies in the usual course. This time Schedule should he strictly adhered to, to avoid
delay in the procurement of material.


                                                                            Sd/-
                                                                       (P. K MALIK)
                                                              Addl. Exc. Dir. (Development)
                                                             Railway Board, and Industrial
                                                            Adviser (Rly. Eqpt) to D.G.T.D.
                                   ANNEXURE IV/1-15

Copy of Board's letter No. 87/RS (G)/772/2 of 20th August 1987 addressed to General
Manager (S), South Eastern Railway, Garden Reach Calcutta and others.


       Sub: Procurement of Imported Stores--Level of Tender Committee and Level of
            Approving Authority

       Ref: C.M.M.(G)'s D. O. No. ADMN (P)/S- 189/A/4/ Pt.II/6479 dated 15th May
            1987.

         It is clarified that the value of purchase against import contracts should be taken as
C.I.F. for determining the level of Tender Committee and the Approving Authority.

       This issues with the concurrence of the Finance Directorate of this Ministry.



                                            **********
                                    ANNEXURE IV/1-16

Copy of Board’s letter no. 85/RSF/794/5 dated 13th October 1987 addressed to General
Manager (Stores), All Indian Railways and others

       Sub: - Government Departments / Public Sector Projects / Undertakings
       contracting on F.O.B./F.A.S. imports and C&F / C.I.F. exports shipping
       arrangements through the Ministry of Surface Transport (Chartering Wing)
       procedure regarding.

       A copy of the Ministry of Surface Transport (Chartering Wing)’s O. M. No. CW 25-
ASO II (1)/72 dated the 26th June 1987 along with a copy of OM No. C/25-ASO II (1)/72
dated 22nd August 1985 on the above subject is enclosed for your information and guidance.


                                       ANNEXURE I

Copy of Ministry of Surface Transport (Chartering Wing)’s O. M. No. CW 25-ASO II (1)/72
dated 22nd August 1985 from Shri B. S. Narulu Shipping Co-ordination Officer.

                                OFFICE MEMORANDUM

               Sub: - Government Departments / Public Sector Projects / Undertakings
               contracting on F.O.B./F.A.S. imports and C&F / C.I.F. exports shipping
               arrangements through the Ministry of Surface Transport (Chartering
               Wing) procedure regarding.

       The undersigned is directed to invite attention to this Ministry’s O. M. of even
number dated 18th September 1982 on the above subject in which it was mentioned that with
a view to ensure that follow up action for arranging timely shipment is taken well in time, a
monthly consolidated statement indicating brief details of all the contracts for the imports and
exports finalised during each month should be furnished to this Ministry by 15th of the
following month on regular basis. It is however observed that such monthly statements are
not being received on a regular basis from various organisations.

2. In this connection it may be mentioned that shipping arrangements for all Government
owned/ controlled cargoes on accounts of all the Ministries/Departments of the Government
of India/ State Governments/ Public Sector Projects and Undertakings whether wholly owned
or controlled by the Government of India or the State Governments are required to be made
through the Chartering Wing (TRANSCHART) in the Ministry of Surface Transport New
Delhi. The procedure to be followed for arranging shipment of Government owned/controlled
cargos through the chartering wing (TRANSCHART) has been explained in detail in the
Ministry’s O. M. of even number dated 8th June 1982 and is again summarised below for
guidance: -

       (i)     As per General Policy of Government contracts for imports from abroad are to
               be finalised on F.O.B./F.A.S. basis and those for exports from India on C. &
               F. /C. I. F. basis and prior concurrence obtained from the Ministry of Surface
               Transport (Chartering Wing) (TRANSCHART), New Delhi before making
               any departure therefrom.
       (ii)    A set of Specimen shipping clauses to be incorporated in the various types of
               contracts for imports and exports of general liner and bulk cargoes was
               circulated vide this Ministry’s O.M. of even number dated 8th June l982. It
               may be ensured that the relevant prescribed shipping clause is incorporated in
               the contracts for imports and exports.

       (iii)   Two copies each of all the contract whether F.O.B./F.A.S. or C. &F. /C.I.F.
               /F.O.R. /TURNKEY in respect of both imports and exports alongwith cargo
               particulars in the prescribed proforma should be sent to this Ministry in
               duplicate as soon as are finalised for taking

       (iv)    A consolidated monthly statement indicating brief details of the contracts
               finalised for imports during each month should be furnished to the Chartering
               Wing of this Ministry by 15th of the following month on a regular basis in the
               prescribed proforma (copy enclosed). The monthly statement should be
               prepared in two parts one in respect of F.O.B. &/F. A. S. imports and C. &F.
               /C.I. F. exports and the other in respect of C. &. F. /. C.I. F. imports and F. O.
               B/ F. A. S. exports. In the case of long-term contracts, the details regarding the
               system of extension should be indicated.

       (v)     The following stipulation should he made in the letter of credit relating to
               import of general liner cargoes from U. K. including Northern Ireland (also
               Eire) the Northern continent of Europe (West Germany, Holland, Belgium,
               France, Norway, Sweden, Denmark, Finland) and from the French and
               Western Italian Ports of the continental Seaboard of Mediterranean and
               Adriatic Ports: -

       “ L/C negotiable against production of complete set of clean Bill of Lading etc., and
       certificate by M/s. Schenker and Co. Gmbh, Hamburg or their accredited local load
       ports Agents certifying that Shipment has been arranged in accordance with the
       instructions of the Ministry of Surface Transport and transport Bhavan (Transchart)
       New Delhi.

3. There have been prolonged recessions in freight market since 1981 and the shipping
industries through out of World including Indian Shipping Industry are facing great hardship.
There is therefore, very urgent need to provide maximum cargo support to Indian vessels and
follow the policy of buying on F.O.B./F.A.S. and selling on C. &F. /C.I.F. basis and
obtaining prior concurrence from the Chartering Wing (Transchart) of this Ministry before
making any departure therefrom scrupulously in order to retain control over shipment and
provide maximum cargo to Indian Vessels.

4. It is requested that the above may kindly be brought to the notice of all the Public Sector
Undertaking/Projects/Purchasing Selling Organisations under the administrative control of
the Ministries/Departments concerned for compliance. A copy of the instructions issued may
also be endorsed to this Ministry.


                                        ************
                                       ANNEXURE II

Copy of O.M. No. SC-11011/1/86-ASO II dated 26th June 1987 from Ministry of Surface
Transport (Chartering Wing)’s New Delhi along with a Copy of O. M No. CW/25-ASO
11(1)/72 dated 22nd august 1985 from Shipping Co ordination Officer.

                                OFFICE MEMORANDUM

       Sub: Government Department/Public Sector Projects/Undertaking contracting
       on F.O.B./F.A.S imports and C. &F. /C.I.F. exports Shipping arrangements
       through the Ministry of Surface Transport, Chartering Wing – Procedure
       regarding.

       The undersigned is directed to invite attention to this Ministry’s O. M. No. CW/25
ASO II/72 dated the 22nd August 1985 on the above subject (copy enclosed) in which the
procedure to be followed for arranging shipment of Government owned/controlled cargoes
through the Chartering Wing (Transchart) of this Ministry has been summarised.

       2. As mentioned in the said O. M. dated 22nd August 1985, according to General
Policy of Government contracts for imports from abroad are to be finalised on F.O.B./F.A.S.
basis and those for exports from India on C. & F./C. I F. basis and prior concurrence is
required to be obtained from this Ministry before making any departure therefrom. Two
copies each of all the contracts whether F.O.B./F.A.S./C. & F/ C. I. F./ F.O.R/ T. U. R N.
K.E.Y. in respect of both imports and exports along with cargo particulars in the prescribed
proforma (in duplicate) are also required to be furnished to the Ministry as soon as the
contracts are finalised for taking further necessary action with regard to shipping
arrangements.

        3. As mentioned in para 2(iv) of the above cited O. M. dated 22nd August 1985,
consolidated monthly statement indicating brief details of all the import/export contracts
finalised during each month is also required to be furnished to this Ministry by the 15th of the
following month on a regular basis in the prescribed proforma.

       4. It has been observed that some of the Departments/Public Sector
Undertakings/Projects are not furnishing copies of the Purchase/Sale Contracts and the
consolidated monthly statement to this Ministry on regular basis. In connection the audit have
pointed out that in the absence of such information Chartering Wing is not able to exercise
proper control over shipments and cases were there is departure from the existing policy of
buying and selling as envisaged.

       It is therefor essential that two copies each or all import / export contracts along with
cargo particulars (in duplicate) are furnished to this Ministry by all concerned as soon as the
contracts are finalised and a consolidated monthly statement indicating brief details of all
contracts finalised during each month is also furnished by 15th of the following month on a
regular basis. In case no contract is finalised during any particular month on Nil statement
should be sent.
5. There has been prolonged recession in freight market the world over and all maritime
countries are adopting various measures to assist their own National lines. The Indian
Shipping Industry is facing great hardship due to prolonged recession in freight market and
there is very urgent need to provide maximum cargo support to Indian Vessels. It is therefore,
requested that all the purchasing / selling authorities may be advised to follow the policy of
buying on FOB/ FAS and selling on C&F / CIF basis scrupulously in order to retain control
over shipment and arrange shipment by Indian Vessels to the maximum extent possible and
obtain prior concurrence from the Chartering Wing (TRANSCHART) of this Ministry before
making any departure therefrom.

6. It is requested that the above may kindly be brought to the notice of all the Public Sector
Undertakings/ Projects, Purchasing / Selling Organisation under the Administrative control of
the Ministries / Departments concerned for compliance. A copy of the instructions issued
may also be endorsed to this Ministry.




                                             ********
                                     ANNEXURE IV/1-17

Copy of Board’s letter No. 87/F (F. EX) 1/1 dated 12th September 1988 addressed to General
Manager (Stores) Southern Railways and others.

                       Sub: - Airlifting of imported materials

         While examining proposals for airlifting of imported materials received from different
Railways/ Units, it has been observed that the cost difference between the sea freight and
airfreight is not indicated, nor the saving in time by resorting to airlifting is given. It would
facilitate processing of airlifting proposals if these details are furnished along with your
proposals for airlifting of materials.

       It has also been observed that airlifting is being resorted to in, respect of indents
placed with the centralised procurement Agency 2/3 years back, but procurement finalised
only recently. If the requirements could be postponed for 2/3 years due to late finalisation of
Tender, the Railway/ unit can wait for another ¾ months if the material is booked by sea
instead of resorting to airlifting necessitating payment of Foreign Exchange. In this
connection attention is invited to Para 2.2 of Board’s letter No. 82/F (F.EX) 1/1 dated 4th
June 1985 wherein it has been emphasised that airlifting should be resorted to for the
minimum inescapable quantity required in exceptional circumstances of extreme urgency.

       The above points may please be kept in mind while sending airlifting proposals to the
Board in future.




                                        ************
                                   ANNEXURE IV/1-18

Copy of letter No. 82/F (F. EX) 1/I Pt I dated 28th March 1989 from Railway Board New
Delhi addressed to General Manager (Stores), Diesel Locomotive Works Varanasi.

       Sub: Clarification regarding payment of Agency commission etc. in foreign
       contracts

       Ref: Your letter No. S/GT/Bid Condition dated 5th September 1988

        The various issues raised in your letter referred above have been examined in this
office and the position is clarified as under: -

       (i)     As per World Bank Guidelines, no specific clause can be incorporated in the
               Tender document stipulating that the Agency commission should not exceed 5
               percent of the F.O.B. value. This clause is therefore meant for only non World
               Bank financed Tenders.

       (ii)    In terms of instructions issued vide this office letter No. 82/ F (F. EX) 24. 1/
               CLW/11 dated 16th November 1982, payment of Agency Commission
               exceeding 5 percent of F.O.B. value is required to be approved personally by
               the General manager with the concurrence of his F. A. & C.A.O. Your
               suggestion for delegation of powers to lower Authorities for approving
               payment of Agency commission exceeding 5 percent has not been considered
               acceptable.

       (iii)   The existing clause incorporated in the Tender document for payment of
               Agency Commission is quite comprehensive and it clearly stipulates that the
               Indian Agent will receive the payment in non convertible Indian Rupees. Any
               change in this clause to provide that no Agency Commission is payable in
               Foreign exchange has not therefore been considered essential.

                                                                              Sd/-
                                                                        (K K SHARMA)
                                                                 Dy. Director Finance (Loan)
                                                                         Railway Board
                                    ANNEXURE IV/1-19

Copy of Boards letter No. 89/RS(G)/779/6 dated 26 th April 1989 addressed to General
Managers, All Indian Railways and others

       Sub:-Indian Agents of Foreign Suppliers-Policy on

       Ref: -Ministry of Finance (Department of Expenditure) Office Memorandum No.
            F.23/(I)-E.11 (A/89 dated 31 st January 1989)

        Based on the Ministry of Finance's above mentioned reference it has been decided
that all particulars relating to Agency Commission, in the contracts for import of goods
services/works, may be reported to the Enforcement, Directorate of Finance, to prevent
leakage of Foreign Exchange and Tax evasion on Agency Commission. Since the
Enforcement Directorate will in turn be informing other concerned Agency, sufficient
number of copies of relevant contracts and their amendments may invariably be marked to
them.       .



                                   ************
                                      ANNEXURE IV/1-20



Copy of Boards letter No. 87/ F (F. EX) 1/3 dated 19th May 1989 addressed to General
Manager, D.L.W., C. L. W. and I.C.F. and copy endorsed to the FA. & C. A.O. /D. L. W. / C.
L W. and I. C. F


                            Sub: Delay in finalisation of Tenders

        It has come to the notice of the Board that Production units are taking unduly long
time in finalising Tenders for procurement of Stores with the result that by the time the cases
are received in the Board for release of Foreign Exchange/ Board’s approval enough validity
period is not available for processing the case. This is also leading to criticisms from other
Agencies like World Bank, Ministry of Finance etc. Board desire that all Tenders should be
finalised within a period of sixty days from the date of opening of the Tender and sent to the
Railway Board for release of Foreign Exchange/Board’s approval wherever necessary. if any
particular case, it takes more than 60 days to finalise the Tender, the reasons for delay should
be explained while forwarding the proposal to the Railway Board for release of Foreign
Exchange/Board’s approval.


       Please acknowledge receipt and ensure strict compliance of the above.



                                      *********
                              ANNEXURE IV/1-21

 Copy of letter No. 89/F (F.EX) 1/ 1 dated, 30th May 1989 from Ministry of Railways
(Railway Board) New Delhi addressed to General Managers, and I.C.F.

       Sub:    Evaluation of Bids involving financial package Discount and Exchange
               Rates to be adopted.

        The Ministry of Finance (DEA) have issued instructions regarding the methodology
to be followed and, the discount and exchange rates to be adopted for evaluation of Tenders
which are accompanied with financial packages. The Ministry of Finance (DEA) have also
circulated the discounting rates for the quarter April—June, 1989 (Annexure I) Prior to these
instructions, a uniform discounting rate of 10 percent was adopted for evaluation of financial
packages. However, with the issue of latest instruction the discounting rates as prescribed in
O.E.C.D discounting formula (as per Annexure I) are required to be adopted. A copy of
M.O.F. (DEA)’s O. M No. 4 (5)-FEB1/ 88 dated 28th December 1988 along with detailed
note regarding the methodology of evaluation of financial packages to be adopted is also
enclosed as Annexure II and Annexure III respectively.

2. It is requested that bids involving financial packages (which are normally asked for in
Tenders valuing above Rs. 10 Crores) be evaluated keeping in view these instructions.
                                         ANNEXURE I

Copy of Office Memorandum dated 28th December 1988. from the Ministry of Finance,
Department of Economic Affairs (Foreign Exchange Budget Division).

       Sub:    Evaluation of Tender Bids—Discount and Exchange Rates to be adopted.

        As per the existing practice all financial packages, whether they contain soft,
commercial or a mix of soft and commercial credit are converted. Into Rupees from the
respective currencies and discounted at a uniform rate of 10 percent for comparative
evaluation of the bids. In accordance with office Memorandum F. No. 5 (3)/ FEB. I/79 dated
the 15th June, 1979 of the Department of Economic Affairs, Ministry of Finance, the
conversion of ‘Foreign Currencies into Rupees is done taking into account the B. C. selling
rate of State Bank of India on the date of opening the price bid or the rate obtained closer to
the date of award of contract in case there is a significant time lag between the opening of
price bid and award of contract.

2. In order to take into account inter se fluctuations in the currencies of donor countries, it has
been decided to adopt the D. E. C. D. discounting formula with effect from, 1st January 1989.

3. Currently, the O. E. C. D. formula gives weightage to the uniform discounting rate of 10
percent and the Commercial Interest Reference Rate (C.I.R.R.) in the ratio of 25:75, Thus,
the O. E. C. D. formula for calculation of discount rate is as follow: -

               Discount Rate = 0.25(10) + 0.75 (C.I.R.R.)
                             =2.5 +3/4 C.I. R. R

4. The Commercial Interest Reference Rate is considered to be representative of financial
commercial lending rates of interest in the domestic market of the currency concerned. In
addition, it corresponds closely to a rate for a first class domestic or Foreign Borrower and is
based on the funding cost of fixed interest rate finance over a period not less than five years.

5. Based on the formula in para 3 above, the Department of Economic Affairs will circulate
discount rates important currencies every quarter. A table giving the relevant rates by
currency, for the quarter January - March 1989 is attached.

6. In case the time lag between the date of opening the price bid and final evaluation of the
bid is longer than three months then for evaluation of price bids.

       (i)     The notified discount rate prevailing on the date of evaluation will be taken
               into account for purposes of evaluation of credit packages.

       (ii)    The B. C. selling rate of State Bank of India prevailing on the date of the final
               evaluation of the will be adopted for converting the various currencies into
               domestic currency.

7. It may be emphasised that the above discount rates are to used only for evaluation of
financial packages in different currencies and for any other purpose, the present procedure for
evaluation of projects viability will continue and is not affected by this O.M.
                                  ANNEXURE

                    DEPARTMENT OF ECONOMIC AFFAIRS

Discounting Rates to be adopted for evaluation of Tender bids the quarter April- June
1989

Note: The following rates have been computed based on formula followed by O.E.C.D. as
described in to the covering note

                Currencies                      Discount Rate(% per annum)
                   Sterling                                   10.90
                 U.S. Dollar                                  10.43
                    D. M.                                      8.59
                Japanese Yen                                   6.63
              Canadian Dollar                                 11.09
               Danish Kroner                                  10.38
                Dutch Florins                                  8.61
                   E. C. U.                                     ---
                French Franc                                  10.02
                 Italian Lira                                 11.42
               Swedish Krone                                  11.19
                 Swiss Franc                                   7.94
             Austrian Schilling                                8.30
             Newzealand Dollar                                13.19
               Spanish Poseta                                 13.15
              Australian Dollar                               14.01
              Norweign Krone                                  11.44
               Belgian Francs                                  9.59
              Finnish Markka                                   9.81
            Methodology of evaluation of FINANCIAL PACKAGE

1. Normally the financial packages offered consist of face value of credit, maturity period,
grade period, annual interest rate, commitment fee (over undrawn balance), management fee
insurance fee etc.,

2. The grant element of a loan is computed to arrive at the extent of concessionality of a
financial package. The grant element of a loan can be computed as the difference between
the original face value of the loan and the present value of the debt service. The lower the
interest rate, the largest the grant element. For loans with a concessional interest rate, the
grant element is larger, the longer the maturity of the loan and the grace period. This is
because a longer loan or grace period means that the barrower holds on to his concessional
funding longer before he must barrow commercially.

3. The present value of the debt service is equal to the sum of the discounted debt service
payments. Each debt service payment is discounted by 1+ the discount rate per period or
raised to the power. Where (t) is the number of periods between the loan and the period in
which the respective element of the debt service occurs. Mathematically,

         PV = N [D.S./(1+r)] t ,        t=1

       Where D.S. = debt service, r - the discount rate and N the numbers of periods.

4. The critically ‘ r ’ should be carefully chosen to reflect the Cost of capital. The present
value is sensitive to the choice of the discount rate. Till recently an annual discount rate of
10 percent was assumed for all currencies and time periods. This however, implied that
commercial rates were concessional. The use of any single rate does not take in to account
differences in rates between different currencies apart from Charges in interest rates over
time.

5. In order to clarify the position regarding methodology of evaluating a credit package, a
simple example has been worked out which is enclosed. The methodology followed in the
example is explained below: --

       (1) Wherever fees (other than interest rate) are also an annual basis, these have been
       added to the interest rate Management fees etc., expressed as a percentage of face
       value of credit and payable flat are assumed to be paid on signature of the Financial
       packages i.e., zero period. Commitment fee is chargeable on undrawn balance of
       financial package offered (wherever indicated). Interest is leviable only on the drawn
       position of the financing in accordance with draw down schedule.

       (2) Grant element as a percentage has been worked out as follows: -

       Face value of Credit-- P.V. of Credit  100, Face value of Credit

       (3) Grant element in value is face value of credit less present value of credit.
(4) In order to arrive at present value of credit, all outflows including repayment of
principal interest commitment fees, and other fees, as and when payable, are
discounted at a choosen rate. (This will be the O. E. C. D. rate now circulated by D. E
A. the rate will be divided by 2 if repayment of principal and interest is on six
monthly basis). Payments of interest and instalments of principals are taken as semi-
annual (as indicated in the financial package offered). All such semi-annual outflows
are discounted at the chown rate in order to arrive at present value of each such
outflow. 2 to arrive at the semi-annual rate divide both annual interest rates and
discount rates. The summation of present value of all outflows gives the total present
value of a credit package. It is the difference between this sum of present value and
face value of credit, which gives the grant element in absolute value.

(5) The comparative evaluation on the basis of analysis indicated above enables
choice of the best financial package, other things being equal the financial package
with the lowest present value emerges the cheapest and the best option.

(6) In the example, it has been assumed that the loan is drawn at different percentages
of the face value of loan during the first few years.

(7) The present value determined as above has to be converted to Rupees using the
exchange rate as per guidelines in O.M. No. 4(5)-FEB I/88 dated 28th December 1988
issued by this Department.

(8) Till recently since a uniform discount rate of 10 percent was adopted for
discounting cash flows, a table of grant element with different interest rates maturity
and grace period could be constructed, with the adoption of the O.E.C.D. method of
discounting at different rates for different currencies, it is not possible to have a table
of value. With the method suggested it should be possible to have a software package
made either in lotus or in D- base 3 for the purpose.



Loan (Original) Currency-      100.00       Interest (%) (Semi annual)     2.50
Maturity (years)                15.00       Management Fee (Flat)          0.25
Grace period                     5.00       Commitment fee(semi annual) 0.25
                                            Discount rate (%) (semi annual) 5.00
                                            Present value                  64.51
                                            Grant element                  35.49
                                            Grant element %                33.49
Period   Payment    Draw    Balance   Interest   Commit-    Total   Discount   P.V.
 (semi              down                         ment fee            Factor
annual             Amount
  0.00    0.00      10.00    10.00     0.00        0.23     0.48    1.0000     0.48
  1.00    0.00      15.00    25.00     0.25        0.19     0.14    0.9524     0.42
  2.00    0.00      15.00    40.00     0.63        0.15     0.78    0.9070     0.70
  3.00    0.00      25.00    65.00     1.00        0.09     1.09    0.8638     0.94
  4.00    0.00      25.00    90.00     1.63        0.03     1.65    0.8227     2.36
  5.00    0.00      10.00   100.00     2.25        0.00     2.25    0.7835     1.76
  6.00    0.00       ---    100.00     2.50        0.00     2.50    0.7462     1.87
  7.00    0.00       ---    100.00     2.50        0.00     2.50    0.7107     1.78
  8.00    0.00       ---    100.00     2.50        0.00     2.50    0.6768     1.69
  9.00    0.00       ---    100.00     2.50        0.00     2.50    0.6446     1.61
10.00     4.76       ---     95.24     2.50        0.00     7.26    0.6139     4.46
11.00     4.76       ---     90.48     2.38        0.00     7.14    0.5847     4.18
12.00     4.76       ---     85.71     2.26        0.00     7.02    0.5568     3.91
13.00     4.76       ---     80.95     2.14        0.00     6.90    0.5303     3.66
14.00     4.76       ---     76.19     2.02        0.00     6.79    0.5051     3.43
15.00     4.76       ---     71.43     1.90        0.00     6.67    0.4810     3.21
16.00     4.76       ---     66.67     1.79        0.00     6.55    0.4581     3.00
17.00     4.76       ---     61.90     1.67        0.00     6.43    0.4363     2.80
18.00     4.76       ---     57.14     1.55        0.00     6.31    0.4155     2.62
19.00     4.76       ---     52.38     1.43        0.00     6.19    0.3957     2.55
20.00     4.76       ---     47.62     1.31        0.00     6.07    0.3769     2.29
21.00     4.76       ---     42.86     1.19        0.00     5.95    0.3589     2.14
22.00     4.76       ---     38.10     1.07        0.00     5.83    0.3418     1.99
23.00     4.76       ---     33.33     0.95        0.00     5.71    0.3256     1.86
24.00     4.76       ---     28.57     0.83        0.00     5.60    0.3101     1.73
25.00     4.76       ---     23.81     0.71        0.00     5.48    0.2953     1.62
26.00     4.76       ---     19.05     0.60        0.00     5.36    0.2812     1.51
27.00     4.76       ---     14.29     0.48        0.00     5.24    0.2678     1.40
28.00     4.76       ---      9.52     0.36        0.00     5.12    0.2551     1.31
29.00     4.76       ---      4.76     0.24        0.00     5.00    0.2429     1.21
30.00     4.76       ---      0.00     0.12        0.00     4.88    0.2316     1.13
31.00     0.00       ---      0.00     0.00        0.00     0.00    0.2204     1.00
                                    ANNEXURE IV/1-22

Copy of Board’s letter No. 86/F (F. EX) 105/ Trg/7 dated 9th August 1989 addressed to I. C.
F and others.

       Sub: Inclusion of clause regarding overseas training in the tender document for
            Procurement of M & P Equipments.

         Board has observed that the Tender documents generally include a Clause for training
of Railway Personnel by overseas firms in their premises. Usually cost of training is
stipulated to be borne by the firm. In some cases even the cost of passage, Boarding and
lodging is also to be borne by the firms. Inclusion of such clauses in the Tender documents
implies that the relevant cost of training gets in built in the rate quoted by the firms and to
that extent becomes a committed liability on our part irrespective of whether the training
facilities are utilised or not. The Board desires that such clauses regarding overseas training
in such contracts should not be incorporated in the Tender document as a matter of routine
course. In cases where such a training is considered absolutely necessary, a clause should be
included in the Tender documents that the bidders will quote the rated for particular
machine/equipment “with” and “without” training components. In the event of’ training
facility not being utilised, the Railways will make payment only for the remaining part of the
contract and no payment on account of training will be made. Such a provision will have the
added advantage of enabling cost comparison of the training component of the offer.

       It is requested that the above decision should be kept in view while floating new
Tenders related to different sources of finance for procurement of M & P. etc., where
overseas training is considered necessary.



                                         *********
                                   ANNEXURE—IV/1-23

                  GOVERNMENT OF INDIA (BHARAT SARKAR)
                 MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                             (RAILWAY BOARD)

No. 89/RS (G)/779/6                                  New Delhi, Dated 13th November, 1992


The General Manager (Stores),
All Indian Railways & Production Units.

       Sub : Indian Agents of Foreign Suppliers Policy on.

       Ref. : Board's letter of even number dated 25th April 1989 and 13th August 1992.
                                            ***

       Please refer to Board's letter under reference wherein All Indian Railways/Production
Units were advised to furnish necessary particulars relating to agency commission on
Contracts for import of goods, services/works etc. to the Enforcement Directorate of Ministry
of Finance, to prevent leakage of foreign exchange and tax evasion on the same.

       Based on the instructions issued by the Ministry of Finance on the above subject, the
matter has been examined in detail in the Board's office and it has been decided that the for
the import of Railway items/equipment:

        " Foreign firms quoting direct against the enquiry and who want Indian Agents/
       Associates and or servicing facilities in India should indicate in their offer the name
       of their Indian Agents/Associates or the representatives they have for servicing in
       India. They should quote net F. O. B./F. A. S. price, exclusive of the amount of
       remuneration or commission provided for the Indian Agents/Associates. It should be
       understood that the purchaser will indemnify the supplier against payment of such
       commission to the Indian Agents/Associates in rupees in Indian in respect of a
       contract arising out of invitation to tender, where the Indian Agents/ Associates'
       remuneration on commission covers a part of the price against the tender".

        Besides the above, the following particulars should also be called from the tenderer/
he foreign firms with a stipulation that the Tenders which do not comply with the above
ulations are liable to be ignored:

       (i). The precise relationship between the foreign manufacturer/principals and their
       Indian Agents/Associates;

       (ii). The mutual interest which the manufacture/principal and the Indian Agents/
       Associates have in the business of each other;

       (iii). Any payment which the Agent/Associate receives in India or abroad from the
       manufacturer/principal whether as a commission for the contract or asap general
       retainer fee;                         |
       (iv). Indian Agent's Income-tax permanent Account number;

       (v). All services to be rendered by the Agent/Associate whether of general natural or
       in relation to the particular contract and the facilities/infrastructure available with
       them for the same.

       (vi). Past performance.

        The Agency commission payable by the tenderer to his Indian Agents shall be
indicated in the offer form in foreign currency. However, Agency commission finally payable
to the Tenderer's agents in India under the contract will be converted to Indian Rupees at the
telegraphic transfer buying rate of exchange ruling on the date of acceptance of offer and
shall not be subject to any further exchange variation. The agency commission shall be paid
in non-convertible Indian rupees only after successful completion of the contract,
commissioning of the machines or equipment wherever involved.

        For the foreign tenderers guidance in furnishing complete information, a check list, as
per Annexure-1 attached may be attached with tender documents which must be completed
by the foreign tenderers participating in the tender.

        In case, where it is felt that for the Stores being imported, neither the Indian Agent
nor after-sales service is required, the following clause may be added:

       " Manufacturers are advised that we would prefer to deal direct with them without the
       inter-session of an Agent and, therefore, they are advised to quote direct".

                 Please acknowledge receipt and ensure compliance.



                                                                         Sd/-
                                                                   (R. S. Lahan)
                                                             Dy. Director, RIy Stores (G)
                                                                   Railway Board.
                                  ANNEXURE—IV/1-24

                                 SOUTHERN RAILWAY

No. G 203/P/Stores Policy                                          Head Quarters Office,
                                                                     General Branch,
                                                                   Dated 24th May, 1993.


Copy of Board's letter No. 92/F (FEX) 1/1 dated 24th May 1993 from Exec. Director,
Finance (L & F) Railway Board/New Delhi to All General Managers.

              Sub. : Enhancement of powers for airlifting of Railway Stores

         Powers for airlifting of imported stores have been laid down in this office letter No.
82/F(FEX)1/1 dated 19th and 22nd May 1986. As per these instructions GMs/CAOs were
authorised to order, in consultation with their FA & CAOs, airlifting of specified categories
of stores, via. small consignments upto 50 kgs or electronic items or sophisticated equipment,
in cases where they have the authority to release foregn exchange, i. e. where they GIF value
of the item does not exceed Rs. 10 lakhs in each case.

        After the introduction of the Liberalised Exchange Rate Management system
(LERMS) w. e. f. 1st March 1992, the General Managers have been delegated powers to
purchase, in consulation with their FA & CAOs, foreign exchange expenditure, under free
resources, upto CIF value of Rs. 2 crores in each case vide this office letter of even number
dated 1 st June 1992 in view of this change, it has been decided that the GM's may now
exercise these powers in consultation with their FA & CAOs upto CIF value of Rs. 2 crores
in each case.

       Other details and terms and conditions remain unchanged.




                                         *********
                                  ANNEXURE—IV/1-25

                             GOVERNMENT OF INDIA
                        MINISTRY OF SURFACE TRANSPORT
                              (CHARTERING WING)

No. SC-18013/1/92-ASO-(II)                                New Delhi, Dated 25th May, 1993

                               OFFICE MEMORANDUM

       Sub : Govt. Departments/Public Sector Projects/ Undertakings Contracting of
             FOB/FAS import and CIF exports—Shipping arrangement through the
             Ministry of Surface Transport (Chartering Wing) from USA/ Canada/
             Mexico and South America— Procedure regarding.


        The undresigned is directed to refer to this Minstry's Office Memorandum No. CW/25
–ASO (II)/72 dated the 8th June, 1982 on the subject mentioned above and to say that as per
the general policy of the Government of India all imports contracts have to be concludec on
FOB/FAS and those for exports on CIF basis in respect of Govt. owned/and controllec
cargoes and for any departure therefrom prior approval of this Ministry has to b obtained.
The policy provides for grant of waivers in suitable cases where it is fou possible to follow
the said policy.

2. The shipping arrangements are being made by Chartering Wing, Minsitry of S Transport,
by using Indian flag vessels and if no suitable Indian vessels are available ii the required
position, foreign flag vessels are chartered. Shipping arrangement in respec of Governmental
liner cargoes are being made by this Ministry through respective Govt. of India's freight
forwarders, as per the procedure laid down in the above referred Office Memorandum dated
the 8th June 1982 (copy enclosed for ready reference).

3. The Govt. of India has an agreement with India-Pakistan Bangladesh-Ceylone and Burma,
Outward Freight Conference (INDPAKCON) FMC Agreement No. 7690) covering the trade
from USA Atlantic and Gulf ports to India through the vessels belonging to the member lines
of this Conference. As per the agreement with the Conference all the Government of India
and State Government Departments, Public Sector Undertakings/ Projects cargoes are to be
shipped through the vessels of member lines belonging to this: Conference.

4. A present there are to Shipprng lines which are members of the INDPAKCON these are: -

       (i)    M/s. Shipping Corporation of India, Bombay.

       (ii)   M/s. Waterman Shipping Corporation.
5. In order to ensure compliance with the transportation agreement with the INDPAKCON,
all the Government of India and State Government Departments, Public Sector Undertakings/
Projects are requested to prescribe in their purchase contracts from US Atlantic and Gulf
Ports to India that all booking must be made through the Government of India's freight
forwarding agent i. e. M/s. Overseas Project Transport (OPT), INC, 46 Seller Street, Kearny
New Jersy-07032. The necessary provision regarding shipment through M/s. Opt may also be
incorporated in the Letter of Credit to ensure shipping arrangement through the vessels of
members of INDPAKCON.

6. It is requested that the above may kindly be brought to the notice of all the public Sector
Undertakings/projects/purchase and selling Organisations under the adminstrative control of
the Ministries/departments concerned and they may be advised to follow the prescribed
procedure for arranging shipment of their cargoes through Chartering Wing (Transchart) of
this Ministry and incorporate the prescribed shipping clause in the contracts,

                                                                    Sd/-
                                                             (N. P. Chauhan)
                                                     Dy. Chief Controller of Chartering

To

       (1) All Ministries/Departments (2 Copies).
       (2) Chief secretaries of State Governments.

Copy forwarded for information and necessary action to :

       (1) The Directorate General of Shipping, Jahaz Bhavan, , Walohand Hirachand Marg,
       Fort, Bombay-1.
       (2) The Chairman, Calcutta Port Trust, Calcutta-700001.
       (3) The Chairman, Bombay Port Trust, Bombay-400001.
       (4) The Chairman, Madras Port Trust, Madras-600001.
       (5) The Chairman, Visakhapatna Port Trust, Visakhapatnam-530004.
       (6) The Chairman, Cochin Port Trust, Cochin-682003.
       (7) The Cahirman, Kandia Port Trust, Gandhidham (Kutch).
       (8) The Chairman, Paradip Port Trust, Paradip Port.
       (9) The Chairman, Mormugao Port Trust, Mormugao (Goa).
       (10) The Chairman, Tuticorin Port Trust, Tuticorin-4.
                                   ANNEXURE—IV/1-26

                   GOVERNMENT OF INDIA (BHARAT SARKAR)
                  MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                              (RAILWAY BOARD)


No. 89/RS(G)/779/6                                           New Delhi, Dated 16th June 1993

The General Manager (Stores),
All Indian Railways & Production Units.

               Sub : Payment of agency commission to Indian Agent for WTA
               Contracts.

               Ref: Board's letter No. 89/RS(G)/779/6 dated 13th April 1992.

        As per the instructions issued vide Board's letter No. 89/RS (G)/779/6 dated 13th
April 1992 the agency commission is payable to the Indian Agents in non-convertible Indian
Rupees only after successful completion of the contract, commissioning of the machines or
equipment, wherever involved. In partial modification of above instructions, Board have
decided that in respect of condtracts for WTA and items of similar nature, where
commissioning, installation and proving tests are not involved, the agency commission, shall
be paid to the Indian Agents for each instalment of the supplies made by their principals, after
receipt at the Indian Ports on the basis of a certificate to be obtained by the pavin.' authority
from the port consignee.

       Please acknowledge receipt.
                                                                    Sd/-
                                                               (R. S. Lahan)
                                                        Dy. Director, Rly. Stores (G),
                                                             Railway Board


Copy to:—

       1.      Managing Directors/IRCON, RITES, IRFC, Container Corporation.

       2.      FA & CAOs, All Zonal Railways, Production Unils and
               Director Finance of RITES, IRCON, IRFC and Container Corporation.

       3.      RS (Sig), RS(WTA), RS(F), RS(P), RS(I), RS(S), Dev. Cell, Track I, II & III
               F (Ex), F(S) I, FS-II, FS(POL). F(S)III, RE(S) Branches of Board's office.
                                   ANNEXURE—IV/1-27

                  GOVERNMENT OF INDIA (BHARAT SARKAR)
                 MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                             (RAILWAY BOARD)

No. 92/BC-DLW/2                                               New Delhi, Dated 30th June 1993

The General Managers
All Indian Railways & Production Units
(Including RCF, DCW & WAP)

Metro Railway, Calcutta.
Railway Electrification, Allahabad.

D. G./RDSO, Lucknow.
Chief Administrative Officer, COFMOW.

               Sub : Draft Para—Loss due to short receipt of material imported
                     from abroad.

                                           *   *     *

        The Principal Director of Audit, Railway Production Units in one of the cases
pertaining to DLW has pointed out that in the case of an import contract with a foreign firm
for supply of Diesel Loco Parts, DLW had to incur a loss to the tune of Rs. 19 lakhs on
account of their failure to obtain a proper certificate of short landing and timely follow up of
Insurance claims and also due to the absence of adequate details on the packages.

        As may be seen from the above, had the DLW adminsitration taken timely action to
have the proper Certificate of short landing and adequate details given on the packages, the
loss could have been avoided. Hence, Board desire that adequate remedial steps should be
taken to avoid recurrence of such cases.

       In this connection certain remedial steps suggested by DLW are reproduced below for
information and guidance.

(i)    In the import contract, a clause should be added to stipulate specific case numbers for
       identification of the x with separate invoices specially where the value of the box
       differs from one to other.

(ii)   Where it is not possible to identify the box or where case numbers are not visible, the
       short standing certificate (B Form) should be obtained at least by sizes/weiaht where
       the size/weight of various boxes is different. This will, however, be required to be
       steamlined in consultation with Port/Customs Authorities so that the claim amount is
       identified correctly at the initial stage itself. In the circumstances if the size/weight of
       the box is also same but the cost of the box differs the system of open
       delivery/Insurance survey at the time of clearance from Port Authorities may have to
       be introduced in consultation with Port/Customs Authorities.
(iii)   On receipt of consignment by Ultimate consignee, where there is short receipt and
        claim amount is not identifiable at the time of receipt itself, open delilvery/ Insurance
        survey should be called for to assess the actual shortage which is binding not only on
        Insurance Company but also is documentary proof for pursuing the claim with the
        supplier/other agencies.

(iv)    Where the discrepancy has come to notice of the purchaser/paying authority, the
        balance payment amount should be held in abeyance till the discrepancy is identified
        and correct shortage established.

This issues with the concurrence of Finance Directorate of the Ministry of Railways.


                                                             Sd/-
                                                       (R. S. Lahan)
                                        Dy. Director, Rly. Stores (G), Railway Board

Copy to:—

EDRS(P), EDF, EDF(S), EDTK(M), EDTK(MC), EDTK(P), DRE(S), DRS(F).
                                 ANNEXURE—IV/1-28

                 GOVERNMENT OF INDIA (BHARAT SARKAR)
                MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                            (RAILWAY BOARD)

No. 87/RS (G)/779/28                                     New Delhi
                                                         Dated 17th August 1993

The General Manager (Stores),
All Indian Railways & Production Units.
Metro Rail, Calcutta.
CORE/Allahabad.
CAO/COFMOW.

       Sub : Shipment of general liner cargo from US Atlantic and Gulf ports to
             India—Wharfage charges at US Ports.

       A copy of the Ministry of Surface Transport (Chartering Wing)'s O. M. No, SC-
19011/' 1/93/ASO-II dated 22nd June 1993 on the above subject is sent herewith for
information and guidance.


DA: Copy of O. M
                                                                    Sd/-
                                                               (R. S. Lahan)
                                                        Dy. Director, RIy, Stores (G)
                                                              Railway Board,

Copy to:—

(1)    FA & CAOs, All Indian Railways, and
       Production Units/Metro Railway, Calcutta &
       CORE/Allahabad.
(2)    The Chief Adminstrative Officers,
       MTP/Rlys, Bombay/Madras/New Delhi.
(3)    GMs (Cons.), S. RIy., Bangalore, S. E.. RLY,                           ;
       Waltairand N.F. RIy., Guwahati.
(4)    DG/RDSO/Lucknow.
(5)    Principal:—
       Railway Staff College, Vadodara.
       Indian Railway Institute of Sig. Engg. and telecomm., Secunderabad,
       Secuderabad.
       Indian Railway Institute of Adv. Track Tech., Poona.
       Institute of Mech. & Elec. Engg., Jamalpur.
       Indian Railway Institute of Elec. Engg. Nasik.
                            GOVERNMENT OF INDIA
                        MINISTRY OF SURFACE TRANSPORT
                              (CHARTERING WING)

No. SC-19011/1/93-ASO-II                                    New Delhi, Dated 22 June, 1993
.

                                OFFICE MEMORANDUM

       Sub:    Shipment of General liner cargos from US Atlantic and Gulf ports to
               India—Wharfage charges at US Ports.

        The undersigned is directed to say that the India-Pakistan-Bangladesh-Ceylon and
Burma Outward Freight Conference covering the trade from Atlantic and Gulf Ports to India
have informed that some U. S. Port Authorities, particularly Houston and New Orleans on the
Gulf of Mexico, assess wharfage charges on cargo. These charges are "Liabilities of the
Owner of the cargo". The actual charges may vary accordingly to the commodity. However,
typical wharfage charges in New Orleans are $ 1.85 per short ton (2000,00 LBS).

2.     The wharfage charges are collected on behalf of the U. S. Port Authority by the
Steamship Line. The past practice has been for the Steamship line to invoice the Government
of India Suppliers. However, the "Owner" of the cargo has been defined as the shipper
appearing on the Bill of Lading.

3.      The problem is that supplier's are not paying wharfage. Suppliers claim that they are
not responsible for wharfage because it is not provided for in their contracts/purchase orders
from consignees. This problem would be solved if the sale/purchase orders specify that the
wharfage charges at US Ports are the responsibility of the Suppliers.

4.     With a view to avoid any dispute regarding receiving wharfage charges by the carriers
from USA suppliers, it is requested that the forllowing provision may be made in the
purchase orders for imports from USA on FAS vessels basis.

       "All charges to FAS vessel including 'Wharfage Charges" similar to the Terminal
Handling Charges will be on sellers account".

5.      It is requested that the above may kindly be brought to the notice of all the Public
Sector Undertakings/Project/Purchasing authorities under the administrative control of the
Ministry/Departments concerned, for necessary action, guidance and compliance.

                                                                   Sd/-
                                                            (N. P. Chauhan)
                                                    Dy. Chief Controller of Chartering
                                                              Tele: 3710356
To

       All the Ministries/Departments.
                              ANNEXURE—IV/1-29

                  GOVERNMENT OF INDIA (BHARAT SARKAR)
                 MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                             (RAILWAY BOARD)

No. 93/RS (G)/779/9                                          New Delhi Dated 19th May 1994

The General Manager (Stores),
All Indian Railways & Production Units.
CORE/Allahabad.
Metro Railway/Calcutta.

       Sub : Enhancement of Earnest Money/Bid Security in respect of import tenders.

                                            ** *
       The matter regarding furnishing Earnest Money/Bid Security by the tenderers against
tenders floated for import of Railway equipment/Items etc. has been reviewed and with a
view to safeguard the Railways' interest adequately against losses, if any, in case a successful
tenderer fails to furnish Security Deposit with in the stipulated periods for the, execution of
the contract it has been decided to enhance the limit of Earnest Money Deposit/ Bid Security
in import tenders as under:—

 (a) For tenders value Rs. 10 crores         2% of the estimated tender value subject to a
                                             ceiling of Rs. 10 lakhs.
 (b) For tenders value above Rs. 10          2% of the estimated tender value subject to a
 crores.                                     ceiling of Rs. 20 lakhs.

                      Please acknowledge receipt.

                                                                        Sd/-
                                                                  (R. S. Lahan)
                                                             Dy. Director, Rly Stores (G),
                                                                  Railway Board.

Copy to:—

(1)    FA & CAOs, All Indian Railways,
       Metro Railway, Calcutta and RE/Allahabad.

(2)    The Chief Adminstrative Officers,
       MTP/Railways, Bombay, Madras, New Delhi.
                               ANNEXURE -IV/1-30

                              GOVERNMENT OF INDIA
                         MINISTRY OF SURFACE TRANSPORT
                               (CHARTERING WING)

No.SC-22011/1/94-ASO. II                                      New Delhi, Dated 13th July 1994


i). Controller of Stores Northern Railway, Headquarter Office, Baroda House, New Delhi.

ii.). General Manager, Bharat Heavy Electrical Ltd., High Pressure Boiler Plant,
Tiruchchirappalli-620 014.

iii). General Manager Steel Authority of India Ltd., Rourkela Steel Plant, Rourkela-769 011
(Orissa)

iv) Shri U. Chakraborty, Dy. Chief Materials Manager, Coal India Ltd., Materials
Management Division, Coal Bhawan Annexe; 10, Netaji Subhas Road, Calcutta-1.

       Sub : Shipment of governmental cargoes from U. S. A.

Sir,

       The undersigned is directed to say that as per Govt. of India Agreement with
INDPAKCON (India-Pakistan-Bangladesh-Ceylon & Burma Outward Freight Conference)
all Govt./PSUs cargoes can be shipped by any of the member lines of the conference. And as
such, there is no restriction that cargo would be shipped only through Indian Flag only.
Kindly note that at present there are two member lines i.e. (i) Shipping Coporation of India
Ltd., Bombay and (ii) Waterman Lines, USA of the Conference and cargo can be shipped
through the vessels belonging to any of these two member lines.

        It is, therefore, requested that while finalising the purchase order/L. C., kindly yporate
the correct shipping clause in future and existing contracts may be suitably Wtded. A copy of
the circular issued by this Ministry regarding shipping clauses to be included in the purchase
orders is enclosed for your ready reference.

       Thanking you,

                                                                      Yours faithfully

                                                                             Sd/-
                                                                   (TARSEM KUMAR)
                                                                   Asstt. Shipping Officer,
                                                                       Tele : 3719480
Encl: As above
Copy to :     Shri Pramod Bhandari, Regional Director, Steamship Corporation
              C/0-Maritime Services Pvt. Ltd., 203, Competent House,
              F-14, Connaught Place, New Delhi-110 001.
                                  ANNEXURE—IV/1-31

                               GOVERNMENT OF INDIA
                                 (RAILWAY BOARD)

No. 92/F(FEX) 1/1.                                              New Delhi Dated 10.08.1994

The General Manager (Stores)
All Indian Railways/PUs.

       Sub: Criterion for evaluation and comparison of bids in import tenders-
            Date of exchange rate to be adopted.

      Instructions were issued earlier vide Board's letter No. F (LN)/71/5/1 dated 10th June
1971 in regard to the procedure to be followed for evaluating the bids received in response to
tenders financed by the world Bank/ADB. This procedure requires use of the exchange rates
ruling at the time of decision to notify the award to the successful bidder. Railways have
generally followed this procedure for all imports whether funded by a multi-lateral agency
(like World Bank, ADB etc.) or by free resources.

     The existing procedure of evaluation and comparison of bids in import tenders has been
reviewed by the Board and it has been decided that the exchange rates ruling on the date of
opening of commercial bids may be adopted as the basis for evaluation and comparison of
bids in all future import purchases including those funded by the Asian Development Bank
and World Bank.

    Ministry of Finance (Department of Expenditure) has recently circulated Standard
Bidding Documents (SBD) for use in World Bank assisted projects negotiated after 1 st May
1993. The relevant clause relating to the evaluation and comparison of rated provised in the
SBD s reproduced below:—

       " To facilitate evaluation and comparison, the Purchaser will convert all Bid Prices
       expressed in the amounts in various currencies in the Bid Price as payable, to the local
       currency of the Purchaser's country at the B. C. selling market exchange rate
       established by State Bank of India in the purchaser's country for similar transaction as
       on the date of Bid opening ".

       The above referred clause in the SBD also corresponded to the Board's decision for
adopting the exchange rates ruling on the date of opening of the commercial bids for the
purpose of evaluation and comparison of bids. It is therefore, desired that all bidding
documents presently in use on your Railway/Administration may be amended forthwith tdj
incorporate the revised procedure in accordance with the decision referred in Para 2s above.

              Please acknowledge.

                                                                      Sd/-
                                                               Executive Director
                                      ANNEXURE I

       Copy of Board's letter No. F(LN)71/5/1 dated 10th June 1971 from the Joint
Director, Finance (L.&F.), Railway Board, New Delhi, addressed to General Managers, All
Indian Railway including I. C. F.

               Sub:   Procedure for procurement of goods and services to be financed by
                      the World Bank or I. D. A.

               Ref:   Boards letter No. F(LN)64/36 dated 6th January 1965
                                           ***

        Some countries have recently decided to depart from a fixed rate of exchange and
float their own currency. World Bank have in that connection laid down the following
procedure for evaluating the bids received from different countries in response to the same
tender.

2.      The currency or currencies in which the price offered in a bid should be valued in
terms of a single currency specified in the tender for comparision of all bids. The rates of / ,
exchange to be used in such valuation should normally be those published by an official
source and applicable to similar transactions on the day bids are opened. Should there be a
change in the value of the currencies before the award is made, the exchange rates at the time
of the decision to notify the award to the successful bidder should be used.

3.     The rates of exchange to be used in such evaluation should be ascertained from the
State Bank of India.

4.     Plase acknowledge receipt.
                                 ANNEXURE—IV/1-32

                  GOVERNMENT OF INDIA (BHARAT SARKAR)
                 MINISTRY OF RAILWAYS (RAIL MANTRALAYA)
                             (RAILWAY BOARD)

No. 94/FS (POL)/IS/6                                 New Delhi, Dated 11th October, 1994


The General Managers,
All Indian Railways Including PUs.
COFMOW, Metro Railway, Calcutta,
RDSO, Lucknow and CORE, Allahabad.

       Sub:   Valuation of contracts for payment of Marine Insurance Premium for
              import of Railway Material.

                                          * * *

      On scrutiny of the original records of one Railway relating to payment of Insurance
premium, it is revealed that the valuation of the consignment for declaration has been made
wrongly by including element of agency commission and custom duty. As per clause 8 of the
Marine Insurance cover the basis of valuation should be as under:

      FOB/FAS + 10% where the contract is FOB/FAS basis.
                            or
      C & F only where the contract is C & F basis.

     You are, therefore, requested to review all the cases that no overpayments have been
made by declaring the amount wrongly. Report of review may be furnished by 30th
November 1994, for the information of the Board.

                                                                 Sd/-
                                                         (R. C. Chauhan)
                                                     Director, Finance (Stores)-l
                                                           Railway Board.

DA/Nil.

Copy to :     FA & CAOs, All Indian Railways, Metro Railway, Calutta and Production
              Units, COFMOW. RDSO. Lucknow & Core, Allahabad.
                                  ANNEXURE—IV/1-33


No. SC-22011/1/94-ASO. II         .                New Delhi, Dated 15th February 1995

Shri. Sushil Kumar,
Director Railway Stroes (F),
Railway Board,
Ministry of Railways,
Rail Bhavan, New Delhi-110 001.

            Sub: Shipment of governmental cargoes from other than U. S. A.

                                        *    *    *
Sir,

        I am directed to refer to your 0. M. No. 84/RSF/749/Insp. dated 13th February 1995
on the above subject and to clarify that in all purchase orders, stipulation may be made that
shipments to be arranged by Conference lines vessels and Indian members lines vessels are
also utilised wherever possible. A copy of O. M. No. CW/25-ASO. 11(1)72 dated 8th June,
1982 regarding procedure and prescribed shipping clauses to be incorporated in purchase
orders is enclosed herewith for necessary guidance and compliance.

                                                                Yours faithfully

                                                                      Sd/-
                                                            (TARSEM KUMAR)
                                                            Asstt. Shipping Officer,
                                                                Tele: 3719480
Encl: As above
                                   ANNEXURE—IV/1-34

                               GOVERNMENT OF INDIA
                               MINISTRY OF RAILWAYS
                                 (RAILWAY BOARD)

No. 85/RSF/794/5                                      New Delhi, Dated 5th December 1995


1. The General Manager (Stores),             2. Director General,
All Indian Railways Including                   RDSO, Lucknow.
CLW, DLW, ICF, RCF

3. The General Manager,                      4. Chief Administrative Officer,
Wheel & Axle Plant,                             COFMOW, Tilak Bridge,
18, Millers Road,                               New Delhi-1.
Bangalore.

5. Chief Administrative Officer,
Diesel Component Works,
Patiala.

         Sub : Govt. Deptt/Public Sector Projects/Undertakings contracting on
               FOB/FAS imports & C & F/CIF exports shipping arrangements
               through the Ministry of Surface Transport (Chartering Wing)
               procedure regarding.

                                         *    *   *

        On the above stated subject matter, it has been decided to follow the existing
instructions of Ministry of Surface Transport Circulated vide Board's letter of even No, dated
13th October 1987, till a new policy is formed.

      In this connection a copy of Ministry of Surface Transport's (Chartering Wing)'s O.M,
No. SC-11011/1/86-ASO II dated 26th June 1987, alongwith a copy of O. M. No. CW/25-
ASO-II (1)/72 dated 22nd August 1985 is enclosed for information and guidance.

       Please acknowledge receipt.

Enclosure: As above
                                                                      Sd/-
                                                              (SUSHIL KUMAR)
                                                           Director Railway Stores (F)
                                                                   Railway Board.
Copy to :
1.     The Controller of Stores (Shipping), Central Railway, Bombay
2.     Chief Materials Manager(BI), Eastern Railway, Calcutta,
3.     The Controller of Stores (Shipping), Southern Railway, ICF.
4.    The Ministry of Surface Transport, (Chartering Wing), Parivhan Bhavan, 1 Sansad
      Marg, New Delhi with reference to their D. O. SC-11011/2/95—ASO. II dated July 6,
      1995.
5.    The Embassy of India (Supply Wing), 2536, Massachusetts Avenue. N. W.
      Washington—DC 2000.
6.    The High Commission of India, India House, Aldwyeh, London WC 2B4, NA.
7.    The chief Administrative Officer(R), Metropolitan Railway Transport Project
      (Railways), Bombay/ Madras/New Delhi.
8.    The Embassy of India, 11-go, No. 2-2 Chome, Kundan Minaui, Chiyoda-ku, Tokyo,
      Japan.
9.    The Director General, Supplies & Disposals, New Delhi.
10.    The Railway Liaison Officer, Parliament Street, New Delhi.
11.   The Controller of Stores, Metropolitan Transport Project (Railways), 14,
      Strand Road, 5th Floor, Calcutta.
12.   The General Manager (Mech.), All Indian Railways including CLW, DLW, RCF &
      ICF and DG/ RDSO.
13.   FA & CAOs, All Indian Railways including CLW, DLW & ICF.
14.   The Principal, Institute of Railway Signalling and Tele-communication,
      Secunderabad.
15.   Principal Indian Railways Institute of Advanced Track Technology, Pune.
16.   The Principal, Railway Staff College, Vadodara,
17.   The Chairman, Railway Service Commission, Bombay, Calcutta, Madras, Allahabad,
      Danapur.
18.   The President, Railway Rates Tribunal, Madras.
19.   The Chief Project Officer, wheel & Axle Plant, 18 Millers Road, Bangalore-46.
20.   The Principal, Indian Railway Institute of Mechanical and Electrical Engineering,
      Jamalpur.
21.   M/s. Scheker & Co., Gmbh, 2000, Hamburg-ll, Bei Ben Muhron-5, Hamburg.
22.   M/s. Dyson Shipping Co. Inc., one World Trade Centre, Suite 1033 New York, N. Y.
      10048, USA.
23.   COS/COFMOW, Tilak Bridge, New Delhi.
24.   The Railway Adviser, Embassy of India, 6262-264, Adenauerallee, Bonn (West
      Germany).
25.   The Senior Divisonal Manager, The Oriental Insurance Co. Ltd., 'Jeevan Vihar' 3rd
      Floor, Sansad Marg, New Delhi-1.
26.   The managing Director, RITES/IRCON, M/s. Container Corporation Ltd., New Delhi.
27.   Track Section, A/csll, F(S)II, Mech. (L) Mech. (M & P), M(W), W-lll, (S & T), W-lll
      (Stores), RS(G), F(S)I and 111, RS(Sig.) RS(WTA), RS(S), RS(I), Electrical
      Branches I, II, RAand of Board's Office.
28.   M/s. 0. P. T. Overseas, Project Transport lnc.-6, Setters Street, Kearny New Jersey
      07032.
29.   EDRS (S), JDLRS (W), DDRS(G), EDRS(S), Railway Board.

                                                                Sd/-
                                                          (A. V. S. Rao)
                                                  for Director Railway Stores (F)
                                                          Railway Board
NO. SC-11011/1/86-AS011                                      New Delhi Dated 26th June 1995


                                OFFICE MEMORANDUM

       Sub : Govt. Departments/Public Sector Projects/Undertaking contracting on
             FOB/FAS imports and C & F/CIF exports Shipping arrangements
             through the Ministry of Surface Transport, Chartering Wing-procedure
             regarding.

      Copy of Ministry of Surface Transport (Chartering Wing)'s O. M. No. SC-11011/1/B
ASO11 dated 26th June 1987 alongwith a copy of O. M. CW/25-ASO. 11 (1)/72 dated 22nd
August 1985 from Shri B. S. Narula, Shipping Coordination Officer.

       The undersigned is directed to invite attention to this Ministry's O. M. No. CVH
AS011 (1)/72 dated the 22nd August 1985 on the above subject (copy enclosed) in which the
procedure to be followed for arranging shipment of Governments owned/ controlled cargoes
through the Chartering Wing (TRANSCHART) of this Ministry has been summarised.

2. As mentioned in the said O. M. dated 22nd August 1985, according to genarel policy of
Government, contracts for imports from abroad are to be finalised on FOB/FAS basis and
those for exports from India on C & F/CIF basis and prior concurrence is required to be
obtained from this Ministry before making any departure therefrom. Two copies each of all
the contracts whether FOB/FAS or C & F/CIF/FOR/TORNKEY in respect of both imports
and exports along with cargo particulars in the prescribed proforma (in duplicate) are also
required to be furnished to this Ministry as soon as the contracts are finalised for taking
further necessary action with regard to shipping arrangements.

3. As mentioned in para 2 (iv) of the above cited O. M. dated 22nd August 1985, a
consolidated monthly statement indicating brief details of all the import/export contracts
finalised during each of month is also required to be furnished to this Ministry by the 15th of
the following month on a regular basis in the prescribed, proforma.

4. It has been observed that some of the Departments/Public Sector Undertaking/ projects are
not furnishing copies of the purchase/sale contracts and the consolidated monthly statement
to this Ministry on a regular basis. In this connection the Audit have pointed out that in the
absence of such information, Chartering Wing is not able to exercice proper control over
shipments and cases where there is departure from the existing policy of buying and selling
as envisaged. It is, therefore essential that two copies each of all the import/export contract
alongwith cargo particulars (induplicate) are furnished to this. Ministry by ail concerned as
soon as the contracts are finalised and a consolidated monthly statement indicating brief
details of the contracts finalised during each month is also| furnished by 15th of the following
month on a regular basis. In case no contract is finalised during any particular month, a nil
statement should also be sent.
5. There has been prolonged recession in freight market the world over and all maritime
countries are adopting various measures to assist their own national lines. The Indian
Shipping industry is facing great hardship due to prolonged recession in freight market and
there is very urgent need to provide maximum cargo support to Indian Vesseis. It is,
therefore, requested that all the purchasing/selling authorities may be advised to follow the
policy of buying on FOB/FAS and selling on C & F/CIF basis scrupulously in order to retain
control over shipment and arrange shipment by Indian Vessels to the maximum extent
possible and obtain prior concurrence from the Chartering wing (TRANSCHART) of this
Ministry before making any departure therefrom.

6. It is requested that the above may kindly be brought to the notice of all the Public Sector
Undertakings/Projects, Purchasing/Selling Organisations under the administrative control of
the Ministries/Departments concerned for compliance. A copy of the instructions issued may
also be endorsed to this Ministry.




                                         *********
                                   ANNEXURE—IV/1-35

                             GOVERNMENT OF INDIA
                        MINISTRY OF SURFACE TRANSPORT
                              (CHARTERING WING)

No. SC-11014/1//94-ASO. II/VOL III                                   New Delhi,
                                                                 Dated 27th February 1996.

                                OFFICE MEMORANDUM

        Sub : Ocean transportation of cargo under the control of Government/Public
              Sector Undertakings—review of the policy regarding.

                                          *    *   *

        The undersigned is directed to say that as per the existing policy of Government of
India all import contracts are to be finalised on FOB (Free on Board/FAS (Free Alongside
Ship) basis and those for exports on C & F (Cost and Freightt/GIF (Cost, Insurance, Freight)
basis in respect of Government owned/controlled cargoes on behalf of Central Government
Departments/State Government Departments and Public Sector undertakings under them and
in case of any departure therefrom, prior permission is required to be obtained from the
Chartering Wing of the Ministry of Surface Transport on a case to case basis. The shipping
arrangements are centralised in the Ministry of Surface Transport. These instructions about
FOB/FAS purchases and C & F/CIF sales and entering into contracts where the element of
foreign exchange expenditure is minimum already stand incorporated in the General
Financial Rules of the Government.

       Based on the difficulties/problems, as intimated by certain Government Departments/
Public Sector Undertakings in the changed context of economic liberalisation, the thrust on
performance improvement and competitiveness of Public Sector Undertakings, decanalisation
of certain cargoes, Government has undertaken a through review of the above policy at
various levels and it has now been decided by the Government that: —

(i)     Government policy for import contracts to be finalised on FOB/FAS basis and for
        exports on CIF basis in respect of Government owned/controlled cargoes on behalf of
        Central Government Departments/State Government Departments and Public Sector
        Undertakings under them and centralised shipping arrangements through the Ministry
        of Surface Transport (Chartering Wing) in association with the concerned user
        Ministry/Department/PSU may continue.

(ii)    Prior permission is required to be obtained from Ministry of Surface Transport on a
        case to case basis in case of any departure from the above policy. However, Ministry
        of Surface Transport shall ensure disposal of such requests within four working days
        on receipt of the complete information/request from the concerned Ministry/PSU.

(iii)   Ministry of Surface Transport, Chartering Wing to ensure full utilisation of suitable
        Indian vessels in case they are able to meet the indentor's requirements at competitive
        rates and are able to maintain the time schedule.
(iv)    In case of import of bulk quantities like fertilisers, coal, foodgrains etc. where freight
        element is substantial, a representative from Ministry of Surface Transport may be
        invited to participate in the discussions for advising on the shipping aspects of
        import/export contracts.

(v)     Ministry of Surface Transport should make all out efforts to finalise vessels, Indian or
        foreign, at the most competitive rates and before fixing the vessels, prior approval of
        the indenting department/PSU should be obtained.

(vi)    In order to make imports and exports cost-effective and for judicious use of foreign
        exchange, Ministries/Departments should ensure imports on FOB/FAS and exports
        on GIF basis failing which necessary No Objection Certificate (NOC) should be
        obtained from Ministry of Surface Transport (Chartering Wing) while applying for
        release of necessary foreign exchange for the purpose of chartering foreign vessels
        and for making freight payment in foreign currency.

(vii)   The tendering system to be followed by Ministries/Departments/PSUs will be
        standardised. The Cabinet Secretariat will initiate appropriate action in this regard.

      3. It is requested that above decision taken by the Government of India may kindly be
brought to the notice of all the Public Sector undertakings /Projects/ Autonomous Bodies/
Purchasing & Selling Organisations under the Administrative Control of Ministries and
Departments concerned and they may be advised to follow the prescribed procedure for
arranging shipment of their cargoes through Chartering Wing (popularly known by its Cable
Address "TRANSCHART" in the shipping circle, the world over) of this Ministry and
incorporating the prescribed Shipping Clauses in the purchase order/contracts. They may also
be instructed to send copies each of the contracts in respect of both exports as well as
imports, alongwith cargo particulars like weight, volume loading port, discharging port,
loading rate, discharging rate period of shipment, parcel size and anyother specific condition
relating to shipment of cargoes etc. to this Ministry as soon as the same are finalised, for
taking further necessary action with regard to the shipping arrangements.

4.      A copy of the instructions issued may please also be endorsed of this Ministry.

                                                                    Sd/-
                                                            (T. V. SHANBHAG)
                                                        Chief Controller of Chartering

 To
(1)     All Ministries/Departments of Government of India.
(2)     The Chief Secretary to all the State Governments including the Union Territories.

Copy forwarded for information and necessary action to :—

(1) The Directorate General of Shipping, Jahaz Bhavan, Walchand Hirachand Marg, Fort,
Bombay-400001.
(2) Chairman, Bombay Port Trust
(3) Chairman, Calcutta Port Trust
(4) Chairman, Madras Port Trust
(5) Chairman, Visakapatnam Port Trust
(6) Chairman, Cochin Port Trust
(7) Chairman, Kandia Port Trust
(8) Chairman, Mormugao Port Trust
(9) Chairman, Paradip Port Trust
(10) Chairman, Tuticorin Port Trust
(11) Chairman, New Mangalore Port Trust
(12) Chairman, Jawaharlal Nehru Port Trust
The Chairman & Managing Director, Hindustan Shipyard Ltd., Visakapatnam.
                                  ANNEXURE—IV/1-36

                               GOVERNMENT OF INDIA
                               MINISTRY OF RAILWAYS
                                 (RAILWAY BOARD)

No. 97/RS (G)/779/18                                            New Delhi
                                                              Dated 28th November 1997
                                                                  2nd December1997

The General Manager (Stores),
All Indian Railways & Production Units,

Metro Railway, Calcutta,
R. E./Allahabad.

              Sub : Inclusion of a Clause in global tenders to protect Railways
                    interest due to exchange rate variation.

                                       *    *     *
        In a case detected by Audit, the Railway Administration had to incur extra
expenaditure towards payment of Import Duty on account of variation in the currency
exchange rate in a Global contract in which during the extended delivery period, the FF
appreciated againstt the Indian Rupee. Since there was no clause in the contract to enable
Railway Administration to recover the extra amount of import duty from the firm, the loss
had to be suffered by Railway Administration.

       In order to avoid repetition of above, Board has decided that the following clause may
be incorporated in the Bid documents as well as while granting DP extension in Global
tenders.

       "That any additional expenditure incurred by the purchaser on custom duty, freight
       charges as also extra cost which may arise on account of variation in exchange rate
       during the extended delivery schedule shall be borne by the contractor".

       This issues with the concurrence of Finance Dte of Ministry of Railways.

                       Please acknowledge receipt.

                                                                  Sd/-
                                                          (ASHOK KUMAR)
                                                      Dy. Director, Rly. Stores (G)
                                                            Railway Board
                                    ANNEXURE—IV/1-37

                                GOVERNMENT OF INDIA
                                MINISTRY OF RAILWAYS
                                  (RAILWAY BOARD)

No. 96/RS (G)/11/13/Misc/Pol.                               New Delhi,
                                                            Dated 22nd December 1997

The General Manager (Stores),
All Indian Railways/PUs

         Sub: Criteria for evaluation and comparison of bids in
              import tenders date of exchange rate to be adopted.

         Ref. : Board's letter No. 92/F. Ex. 01/1 dated 10th August 1994.

                                           *   *    *

       A copy of the Railway Board's letter No. 92/F(FEX)1/1, dated 10th August 1994 on
the above subject is forwarded herewith for information and compliance.

         Please acknowledge receipt.

                                                                      Sd/-
                                                               (P. P. KUMAR)
                                                        Dy. Director, Railway Stores (G)
                                                                Railway Board
End. :
                                 ANNEXURE—IV/1-38

                             GOVERNMENT OF INDIA
                             MINISTRY OF RAILWAYS
                               (RAILWAY BOARD)

No. 99/F (FEX) 1/1                                               New Delhi,
                                                                 Dated 3rd February 1999.

The General Manager(s)
All Indian Railways/Production Units

Metro Railway, Calcutta.

The Director General, R. D. S. O., Lucknow.

The CAO, DCW, Patiala.

The CAO, COFMOW, New Delhi.

              Sub:   Evaluation of Tender Bids—Discount and exchange
                     Rates to be adopted.

                                   *    *     *

        A copy of Office Memorandum No. 4(1)FEB. I/EEC. Vl/98 dated 22nd December
1998 received from Ministry of Finance (Department of Economic Affairs) on the above
subject alongwith its enclosures is sent herewith for information and guidance.


End.: As above
                                                               Sd/-
                                                    (K. GANGADHARAN)
                                                  Dy. Director, Finance (L & F)
                                                           Railway Board.

Copy to :-—
       FA & CAOs—AII Indian Railways, Production Units, Metro Railway, Calcutta,
       DCW, COFMOW and Executive Director (Fin,), RDSO, Lucknow.

       EDRS(P), EDRS(S), EDRS(G), EDRE, EDTK(M), EDTK(MC), EDTK(P),
       EDRE(S&T), EDME(W), EDEE(RS), EDF(S)-Railway Board.
                           GOVERNMENT OF INDIA
                            MINISTRY OF FINANCE
                      DEPARTMENT OF ECONOMIC AFFAIRS

F. No. 4(1 )FEB. I/EEC. Vl/18                                    New Delhi,
                                                         Dated 22nd December 1998.

                                OFFICE MEMORANDUM

     Sub: Evaluation of Tender Bids—Discount and Exchange Rates to be adopted.


                                           * * *

        The undersigned is directed to refer to this Department's O. M. No. 4 (2)FEB. 1/96
dated 13th February 1997 (copy enclosed for ready reference) on the above mentioned
subject and to forward herewith a statement of the revised discount rates which is the average
of CIRRs of different currencies during the preceding six months, to be adopted for
evaluation of financial packages in the quarter January-March 1999 as indicated in the
Annexure.

                                                                   Sd/-
                                                            (S. K. VERMA)
                                                   Under Secretary to the Govt. of India

1. All Financial Advisers of all Ministries/Departments of Govt. of India

2. All Officers of the rank of Under Secretaries and above in the Department of Economic
   Affairs.
  Discounting Rates to be adopted for evaluation of Tender Bids for the
                      quarter January-March 1999
Currencies                               Discounting Rate
1.     Sterling                         6.81
2.     US $ upto 5 years                6.11
3.     US $ above 5 years               6.11
4.     DM                               5.16
5.     Yen                              2.23
6.     Australians                      6.16
7.     Canadian $ upto 5 years          6.21
8.     Canadian $ above 5 years         6.19
9.     Danish Kroner                    5.64
10.    Dutch Florins upto 5 years       5.09
11.    Dutch Florins above 5 years      5.30
12.    ECU                              5.08
13.    Finnish Marks                    5.35
14.    French Francs                    5.36
15.    Italian Lire                     5.58
16.    Norwegian Krona                  6.54
17.    Spanish Pesta                    5.31
18.    Swedish Krona                    5.66
19.    Swiss Francs                     4.05
20.    Australian Schilling             5.28
21.    Belgian Francs                   5.59
22.    New Zealand $                    7.45
23.    Irish Punt                       5.28




                                     *******
                             GOVERNMENT OF INDIA
                              MINISTRY OF FINANCE
                        DEPARTMENT OF ECONOMIC AFFAIRS
                                 FEB. II SECTION

F. No. 4/2/96-FEB. II                                  New Delhi, Dated 13th February 1997.

    Sub : Evaluation of Tender Bids—Discount and Exchange Rates to be adopted.

                                             ***

        With reference to Ministry of Finance (Department, of Economic Affairs) Office
Memorandum No. 4(5) FEB. 1/88 dated 28th December 1988 on the subject cited above the,
undersigned is directed to state that the discount rates for foreign currencies are notified by
this Department every quarter for enabling the procuring agencies to determine the real
benefit (or grant element) in credit offers. The rates circulated were based on a formula
adopted by OECD taking into account the periodical changes in the domestic interest rates in
various currencies as reflected by the Commercial Interest Reference Rates (CIRR). This
provided weightages to the uniform discounting rates of 10% and CIRR in the ratio 25 : 75.

2. In 1992, the OECD changed their procedure, and the formula followed by DEA, for
iculating the Differential Discount rates was as follows: —

       (i)     Where the average CIRR of a currency during the preceding 6 months is less
               than 10% the discounting rate is calculated by taking average CIRR plus 25%
               of the differential between that rate and 10%. For example, if the average was
               9%, the corresponding discounting rate for the currency would
               be 9% + 25% (10—9) = 9.25.

       (ii)    Where the average CIRR during the preceding 6 months is 10% or more, the
               discounting rate would be equal to the average CIRR.

3.     The above formula no longer reflects OECD practice, which changed in September,
1994 and again in September, 1996. The September, 1996 change reflects the full transition
to a market based set of rates, or movement away form a uniform 10% DDR to a more
"market oriented" rate which better reflects the underlying costs of funds. It was considered
by the OECD that such rates more accurately reflected the concessionally level of tied loans.

4.     Accordingly, it has been decided that the Department of Economic Affairs will notify
the Differential Discounting Rates for major currencies based on the revised formula as
described below. The Differential Discount Rates are to be calculated as follows: —

                                        DDR =CIRR*

* CIRR is the average of CIRR of each currency for the previous six months.
5. The procedure for conversion of foreign currency bids will, however, remain unchanged.
Such conversion of foreign currencies into rupees is to be done taking into account the BC
selling rate of State Bank of India on the date of opening of price bids.

6. In all cases, the notified discount rate prevailing on the date of opening the price bids will
be taken into account for purposes of evaluation of credit packages.

7. A table giving the Differential discounting Rates for major currencies for the quarter
January-March 1997 is attached herewith.

8. Further, it has also been decided that the option to ask for credit package in tender notices
should be left entirely to the PSUs (Public Sector Undertakings) i. e. it should not be
mandatory. However, if credit packages are available and these are beneficial to the PSUs,
they should be availed. In case a PSU opts to ask for credit packages, then in the interests of
transparency this should be intimated in the tender notices so that bidders are aware of this
fact before tendering their bids.

       This issues with the approval of Secretary (Expenditure).

                                                                       Sd/-
                                                           (JAYA BALACHANDRAN)
                                                              Deputy Secretary (EEC)


1.     All Financial Advisers in the Ministries/ Departments of Government of India.


2.    All officers of the rank of Under Secretaries and above in the Department of
Economic Affairs.
                                ANNEXURE-IV/1-39

                            GOVERNMENT OF INDIA
                            MINISTRY OF RAILWAYS
                              (RAILWAY BOARD)

No. 96/RSF/794/1                                       New Delhi, 14th December 1999

1. The General Manager (Stores),
   All Indian Railways including CLW, DCW, ICF, RCF.

2. Director General,
   RDSO, Lucknow.

3. The General Manager,
   Wheel and Axle Plant,
   Yelhanka, Bangalore.

4. Chief Administrative Officer,
   COFMOW, Tilak Bridge, New Delhi-1.

5. Chief Administrative Officer,
   Diesel Component Works, Patiala.

 Sub :-Govt Deptt./Public Sector Projects/Undertakings/ Autonomous Bodies
       contracting of FOB/FAS imports and CIF exports shipping arangements
       through the Ministry of Surface Transport (Chartering Wing) from
        various sectors-procedure regarding.

                                           ***
       On the above stated subject matter a copy of the Ministry of Surface Transport
(Chartering Wings), Office Memorandum No. SC-18013/1/98-ASO-II dated 16th November
1999 is enclosed for information and guidance.

      Please acknowledge receipt.

                                                             Sd/-
                                                        (A.K.Duhoon)
                                                 Director, Railway Stores (F),
                                                       Railway Board.
No. 96/RSF/794/1                                                 New Delhi
                                                              Dated 14th December 1999
Copy to: —
1.     The C. O. S (Shipping), Central Railway, Mumbai.
2.     C. M. M. (Bl), Eastern Railway, Calcutta.
3.     The C. O. S. (Shipping), Southern Railway, ICF, Chennai.
4.     The Ministry of Surface Transport, (Chartering Wing), Parivahan Bhavan, 1, Sansad
       Marg, New Delhi, w.r.t. their O.M. No. SC-18013/1/98-ASO-lldt. 16.12.99
5.     The Chief Administrative Officer (R), Metropolitan Railway, Transport Project
       (Railways), Mumbai/Chennai/New Delhi.
6.     The Controller of Stores, Metropolitan Transport Project (Railways), 14, Stand Road,
       5th Floor, Calcutta.
7.     The General Manager (Mech.), All Indian Railways including CLW, DLW, RCF&
       ICF.
8.     FA & CAOs, All Indian Railways including CLW, DLW, RCF & ICF.
9.     The Principal, Institute of Railway Signalling and Telecommunication, Secundrabad.
10.    Principal, Indian Railway Institute of Advanced Track Technology, Pune.
11.    The Principal, Railway Staff College, Vadodara.
12.    The Principal, Indian Railway Institute of Mechanical and Electrical Engineering,
       Jamalpur.
13.    C. O. S./COFMOW, Tilak Bridge, New Delhi.
14.    The Managing Director, RITES/IRCON, M/s. Container Corporation Ltd., New
       Delhi.
15.    Tracks section A/cs II, F(S)ll, M(L), M(M & P), M(W), W-ll, W-lll (Stores),
       RS (G), RS(WTA.), RS(Sig.), F(S)I & III, RS(S), RS (I), Electrical Branches III & G
       of Board's Office.
16.    EDRS (S), EDRS (W), EDRS (G), Railway Board.


                                                                  Sd/-
                                                            (A. V. S. Rao)
                                                   for Director, Railway Stores (F),
                                                           Railway Board.
TEELEGRAMS TRANSCHART                                         1, Parliament Street,
   Telex Vahan In                                              Parivahan Bhavan,
31-61157,3161158,31-61159                                       New Delhi-110 001
Fax No.3710356,3719480

                             GOVERNMENT OF INDIA
                        MINISTRY OF SURFACE TRANSPORT
                                (Chartering Wing)

No.SC-18013/1/98-ASOII                                      New Delhi, 16th November, 1999


                                OFFICE MEMORANDUM

       Sub :- Govt Deptt./Public Sector Projects/Undertakings/ Autonomous Bodies
              contracting of FOB/FAS import and CIF exports shipping arrangement
              through the Ministry of Surface Transport (Chartering Wing) from
              various sectors-procedure regarding.

                                             ***
        The undersigned is directed to say that as per general policy of Government of India,
all import contracts have to be concluded on FOB/FAS and those for exports on CIF basis in
respect of Government owned and controlled cargoes on behalf of Central/State/ Union
Territory Govt. Deptts./Public Sector Undertakings Autonomous Bodies and shipping
arrangements are centralised with Chartering Wing of Ministry of Surface Transport. For any
departure from the above policy, prior approval of this Ministry is required. The policy
provides for grant of waivers in suitable cases where it is found not possible to follow the
said policy. The policy provides for grant of waivers in suitable cases where it is found not
possible to follow the said policy.

2. The shipping arrangements are being made by Chartering Wing, Ministry of Surface
Transport by using Indian flag vessels and if no suitable Indian vessels are available in the
required position, foreign flag vessels are chartered. Shipping arrangements in respect of
Government general liner cargoes are being made by this Ministry through respective
Government of India's freight forwarders like M/s. Schenker International, Hamburg, (in
respect of shipment from UK/Continent) M/s. OPT, USA etc. in respect of shipment from US
Gulf/Canada and South America). Shipment of general

3. In order to ensure compliance of the prescribed procedure and also compliance with the
transportation agreement signed by Government of India with M/s. Schenker International
Hamburg, M/s. OPT Overseas, USA, all the government of and State Government
Departments, Public Sector Undertakings, Projects are requested to incorporate prescribe in
their purchase contracts that all shipment should be made through Government of India's
freight forwarders only and the same may also be incorporated in the letter of credit to ensure
shipping arrangements through the Vessels of Members of the Conference and appointed
freight forwarders.
4. It has been brought to the notice of this Ministry that some of the Public Sector
Undertakings are not following the above policy and shipping arrangements are made
through other than GOI appointed freight forwarders. It has been further brought to the notice
of this Ministry that some of the Indian freight forwarding companies are claiming to have
been appointed as freight forwarders by M/s. Surface Transport which is not correct.
Therefore, it is advised that Government of India and State Government Departments and
Public Sector Undertakings should ensure shipment throu Government of India freight
forwarders (as indicated above) only and should not entertc anyother freight forwarder in this
regard.

5. It is requested that the above may kindly be brought to the notice of all the Public Sector
Undertakings/Projects/purchase and selling organisations under the administrativ control of
the Ministries/Departments concerned and they may be advised to follow the prescribed
procedure for arranging shipment of their cargoes through Chartering Wing (Transchart) of
this Ministry and incorporate the prescribed shipping clauses in the import export contracts.

                                                                   Sd/-
                                                           (T. V. SHANBHAG)
                                                       Chief Controller of Chartering
                                                             Tele. 3710356
To
1.     All Ministries/Departments (2 copies)
2.     Chief Secretaries of State Governments

Copy toward for information and necessary action to:

1.     The Directorate General of Shipping, Jahaz Bhavan, Walchand Himchand Marg, Fort,
       Bombay-1.
2.     The Chairman, Calcutta Port Trust, Calcutta-700001.
3.     The Chairman, Bombay Port Trust, Bombay-400001.
4.     The Chairman, Madras Port Trust, Madras-600001.
5.     The Chairman, Visakhapatnam Port Trust, Visakhapatnam-530001.
6.     The Chairman, Cochin Port Trust, Cochin-682003.
7.     The Chairman, Kandia Port Trust, Gandhidham (Kutch).
8.     The Chairman, Paradip Port Trust, Paradip Port.
9.     The Chairman, Moamugao Port Trust, Monmugao (Goa).

								
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