CONFORMED COPY

CREDIT NUMBER 528 IN

Development Credit

Agreement(Tenth Industrial Imports Program Credit)

BETWEEN

INDIA

AND

INTERNATIONAL DEVELOPMENT ASSOCIATION

DATED FEBRUARY 14, 1975

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CONFORMED COPY

CREDIT NUMBER 528 IN

Development Credit

Agreement(Tenth Industrial Imports Program Credit)

BETWEEN

INDIA

AND

INTERNATIONAL DEVELOPMENT ASSOCIATION

DATED FEBRUARY 14, 1975

DEVELOPMENT CREDIT AGREEMENT

AGREEMENT, dated February 14, 1975, between INDIA, acting by itsPresident (hereinafter called the Borrower) and INTERNATIONALDEVELOPMENT ASSOCIATION (hereinafter called the Association).

ARTICLE I

General Conditions; Definitions

Section 1.01. The parties to this Agreement accept all the provisions of theGeneral Conditions Applicable to Development Credit Agreements of theAssociation, dated March 15, 1974, with the same force and effect as if they werefully set forth herein, subject, however, to the following modificAtion thereof (saidGeneral Conditions Applicable to Development Credit Agreements of theAssociation, as so modified, being hereinafter called the General Conditions),namely that paragraph 5 of Section 2.01 is amended to read as follows:

"5. The term "Borrower" means India, acting by its President."

Section 1.02. Wherever used in this Agreement, unless the context otherwiserequires, the several terms defined in the General Conditions have the respectivemeanings therein set forth and the following additional terms have the followingmeanings:

(a) the term "Specified Enterprises" means firms, registered with theBorrower's Directorate General of Technical Development of the Ministry ofIndustry and Civil Supplies and others (excluding Hindustan Cables Limited,Hindustan Teleprinters Limited and Indian Telephone Industries Limited), notifiedfrom time to time by the Borrower to the Association, in the industrialmanufacturing sectors listed in Schedule 3 to this Agreement, as such Schedulemay be amended from time to time by agreement between the Borrower and theAssociation;

(b) the term "Canalizing Agencies" means the following agencies of theBorrower: the State Trading Corporation of India Limited, the Minerals and MetalsTrading Corporation Limited, the Hindustan Steel Limited and such other agenciesas may from time to time be agreed upon between the Borrower and theAssociation; and

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(c) the term "Authorized Dealers" means suppliers of spare parts for heavyconstruction equipment authorized by the Chief Controller of Imports and Exportsof the Borrower's Ministry of Commerce for the purposes of this Agreement, asnotified to the Association.

ARTICLE II

The Credit

Section 2.01. The Association agrees to lend to the Borrower, on the termsand conditions in the Development Credit Agreement set forth or referred to, anamount in various currencies equivalent to one hundred million dollars($100,000,000).

Section 2.02. The amount of the Credit may be withdrawn from the CreditAccount in accordance with the provisions of Schedule I to this Agreement, assuch Schedule may be amended from time to time, for expenditures made (or,if the Association shall so agree, to be made) in respect of the reasonable costof goods and services required for the Project described in Schedule 2 to thisAgreement and to be financed out of the proceeds of the Credit.

Section 2.03. Except as the Association shall otherwise agree, raw materials,semi-finished goods, components and spare parts required for the Project and tobe financed out of the proceeds of the Credit, and to be procured through theCanalizing Agencies, shall be procured in accordance with the provisions of Schedule4 to this Agreement.

Section 2.04. The Closing Date shall be June 30, 1976 or such other dateas shall be agreed between the Borrower and the Association.

Section 2.05. The Borrower shall pay to the Association a service chargeat the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principalamount of the Credit withdrawn and outstanding from time to time.

Section 2.06. Service charges shall be payable semi-annually on May 15 andNovember 15 in each year.

Section 2.07. The Borrower shall repay the principal amount of the Creditin semi-annual installments payable on each May 15 and November 15 commencingMay 15, 1985, and ending November 15, 2024, each installment to and includingthe installment payable on November 15, 1994 to be one-half of one per cent(1/2 of 1%) of such principal amount, and each installment thereafter to be oneand one-half per cent (1-1/2%) of such principal amount.

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Section 2.08. The currency of the United Kingdom of Great Britain andNorthern Ireland is hereby specified for the purposes of Section 4.02 of the GeneralConditions.

ARTICLE III

Execution of the Project

Section 3.01. (a) The Borrower shall carry out the Project, or cause it tobe carried out, with due diligence and efficiency.

(b) The Borrower shall: (i) promptly upon receipt of appropriateapplications issue, or cause to be issued, such import licenses as shall be requiredto carry out the Project; (ii) make available, or cause to be made available, promptlyas needed all foreign exchange which shall be required to carry out the Project;and (iii) with respect to locally produced materials which are subject to allocationmake, or cause to be made, allocations of such materials promptly and in suchquantities as shall be required to carry out the Project.

Section 3.02. The Borrower shall cause the imported goods to be financedout of the proceeds of the Credit to be insured, or cause adequate provision tobe made for the insurance thereof, against hazards incident to the acquisition,transportation and delivery thereof to the place of use or installation, and forsuch insurance any indemnity shall be payable in a currency freely usable by theBorrower to replace or repair such goods.

Section 3.03. (a) The Borrower shall furnish to the Association, promptlyupon their preparation, the plans and programs for the Project, and any materialmodifications thereof or additions thereto, in such detail as the Association shallreasonably request.

(b) The Borrower: (i) shall maintain records adequate to record theprogress of the Project (including the cost thereof) and to identify the goods andservices financed out of the proceeds of the Credit, and to disclose the use thereofin the Project; (ii) shall enable the Association's accredited representatives toexamine the Project, the goods financed out of the proceeds of the Credit andany relevant records and documents; and (iii) shall furnish to the Association allsuch information as the Association shall reasonably request concerning the Project,the program (referred to in Schedule 2 to this Agreement) of which the Projectis a part, the Specified Enterprises, the expenditure of the proceeds of the Creditand the goods and services financed out of such proceeds.

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Section 3.04. The Borrower shall cause the proceeds of the Credit to beused exclusively for the Project.

ARTICLE IV

Other Covenants

Section 4.01. The Borrower shall maintain or cause to be maintained recordsadequate to reflect in accordance with consistently maintained appropriateaccounting practices the operations, resources and expenditures, in respect of theProject, of the departments or agencies of the Borrower responsible for carryingout the Project or any part thereof.

Section 4.02. Except as the Borrower and the Association shall otherwiseagree, the Specified Enterprises and Authorized Dealers shall not, on the groundsthat they are participating in the Project, be subject to any conditions orrequirements for issuance of import licenses and release of foreign exchange notimposed on other enterprises engaged in similar business in the territories of theBorrower.

ARTICLE V

Termination

Section 5.01. The date March 31, 1975 is hereby specified for the purposesof Section 12.04 of the General Conditions.

Section 5.02. The obligations of the Borrower under Section 4.02 of thisAgreement shall cease and determine on the date on which the Development CreditAgreement shall terminate or on the Closing Date, whichever shall be the earlier.

ARTICLE VI

Representative of the Borrower; Addresses

Section 6.01. Any Secretary, Additional Secretary, Joint Secretary, Officeron Special Duty, Director or Deputy Secretary of the Department of EconomicAffairs in the Ministry of Finance of the Borrower is designated as representativeof the Borrower for the purposes of Section 11.03 of the General Conditions.

Section 6.02. The following addresses are specified for the purposes ofSection 11.01 of the General Conditions:

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For the Borrower:

The Secretary to the Governmentof India

Ministry of FinanceDepartment of Economic AffairsNew Delhi, India

Cable address:

ECOFAIRSNew Delhi

For the Association:

International Development Association1818 H Street, N.W.Washington, D.C. 20433United States of America

Cable address:

INDEVASWashington, D.C.

IN WITNESS WHEREOF, the parties hereto, acting through theirrepresentatives thereunto duly authorized, have caused this Agreement to be signedin their respective names in the District of Columbia, United States of America,as of the day and year first above written.

INDIA

By /s/ T. N. KaulAuthorized Representative

INTERNATIONAL DEVELOPMENT ASSOCIATION

By /s / S.M.L. van der MeerActing Regional Vice President

South Asia

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SCHEDULE 1

Withdrawal of the Proceeds of the Credit

1. The table below sets forth the Categories of imported items to be financedout of the proceeds of the Credit and the allocation of amounts of the Creditto each Category:

Amount of theCredit Allocated

(Expressed inCategory Dollar Equivalent)

(1) Fertilizer and Pesticide 37,500,000Sectors

(2) Other Sectors 62,500,000

TOTAL 100,000,000

2. Notwithstanding the provisions of paragraph I above, no withdrawals shallbe made in respect of:

(a) expenditures in the currency of the Borrower, or for goods or servicessupplied from, the territory of the Borrower;

(b) expenditures prior to the date of this Agreement; and

(c) payments for taxes levied by, or in the territory of, the Borroweron goods or services, or on the importation, manufacture, procurement or supplythereof.

3. If the Association shall have reasonably determined that the procurementof any item in any Category is inconsistent with the procedures set forth or referredto in this Agreement, no expenditures for such item shall be financed out of theproceeds of the Credit and the Association may, without in any way restricting

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or limiting any other right, power or remedy of the Association under theDevelopment Credit Agreement, by notice to the Borrower, cancel such amountof the Credit as in the Association's reasonable opinion, represents the amountof such expenditures which would otherwise have been eligible for financing outof the proceeds of the Credit.

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SCHEDULE 2

Description of the Project

The Project forms part of the program of the Borrower to increase, duringthe period from April 1, 1975 to March 31, 1976, pioduction of goods for thedomestic civilian market and for export and utilization of existing equipment bymaking available foreign exchange for the import of raw materials, semi-finishedgoods, components, spare parts and miscellaneous items of manufacturing andconstruction equipment improving thereby the rate of utilization of existingproductive and construction capacity and capital equipment in India.

The Project consists of provision by the Borrower of foreign exchange andother resources required by the respective Specified Enterprises for production ofgoods for the domestic civilian market and for export, and for timely completionof construction works.

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SCHEDULE 3

Industial Manufacturing Sectorsunder the Project*

Listed hereunder are the industrial manufacturing sectors of capitalequipment and other goods from which the Specified Enterprises and AuthorizedDealers are to be selected:

Agricultural

1. Tractors and Power Tillers

2. Fertilizers

3. Pesticides

Electrical

4. Motors, Transformers, Switchgear,Stampings, Cables and Wires (up to 66 kv)

5. Power Generating Equipment and SpareParts, and Boilers

6. Aluminum Smelting

Transport

7. Commercial Vehicles

8. Automotive Ancillaries

Metal Working

9. Machine Tools, Cutting and Small Tools, Abrasives, Ball andRoller Bearings

10. Castings and Forgings

Construction

11. Heavy construction equipment and Spare Parts

* See Section 1.02(a)

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SCHEDULE 4

Procurement

1. With respect to any contract for the purchase of goods to be financed fromthe proceeds of the Credit the cost of which is equivalent to $100,000 ormore:

(a) offers shall be invited from not less than three of the major suppliersfrom member countries of the Bank and Switzerland; and

(b) the contract shall be awarded to the supplier whose offer is the lowestevaluated offer.

2. The Borrower shall cause each Canalizing Agency to retain all relevantdocumentation relating to contracts financed in whole or in part out of theproceeds of the Credit, including without limitation, the details of the offerssought, the names of the suppliers invited to submit offers, the analysis ofoffers, recommendations for award and conformed copies of such contract,for review by the Association at its request.

3. Applications for withdrawal in respect of contracts awarded to the lowest -

evaluated offer shall be submitted to the Association with a certificateindicating that the conditions set forth in paragraph I of this Schedule havebeen satisfied, and with documentation on evidence of payment and ofshipment together with the supplier's invoice.

4. The Borrower shall submit to the Association, together with any applicationfor withdrawal of funds from the Credit Account, two certificates preparedby the appropriate Canalizing Agency stating that: (i) the goods (or anequivalent amount of the goods) in respect of which the withdrawal isrequested are for the account of, and have been or will be delivered to theSpecified Enterprises; and (ii) no withdrawal for these same goods has beenor will be made from the proceeds of any other external financing availableto the Borrower or the Canalizing Agency.

5. The Borrower shall furnish to the Association, promptly after delivery ofthe goods financed in whole or in part from the proceeds of the Creditto the Specified Enterprises, such information as the Association shallreasonably request regarding the per unit cost of the goods to the SpecifiedEnterprise.