Financial Assistance from EXIM of India
Export Import Bank of India (EXIM Bank) was established by an act of Parliament on the 1st January 1982. It is a wholly government owned financial institution, se: up for the purpose of financing, facilitating and promoting India's foreign trade. The Bank commenced operations on the 1st March 1982. Various objectives of the EXIM Bank are:
(a) To translate national foreign trade policies into concrete action plans.
(b) To provide alternate financing solutions to the Indian exporter.
(c) To develop mutually beneficial relationships with the international community.
(d) To forgo relationships with other export development and financing agencies.
(e) To be responsive to the problems of Indian exporters.
EXIM bank plays a role of coordinator, financer, consultant and remoter with regard to India's foreign trade. These services of EXIM bank can be studied under two broad categories:
Fund based Assistance of EXIM Bank:
EXIM bank otters financial services to Indian exporters, commercial banks and also foreign entities.
(a) Facilities for Indian Exporters:
Pre-shipment Credit: Pre-shipment credit is extended to Indian exporters in order to unable thorn to buy raw materials and other inputs for undertaking manufacturing of goods for export purpose.
Export (Supplier's) Credit: At the post-shipment stage, this facility enables Indian exporters to extend term credit to overseas importers, of eligible Indian goods.
Finance for Consultancy and Technology Services: This facility enables Indian exporters of consultancy and technology services to extend term credit to overseas importers.
Foreign Currency Pre-shipment Credit: This facility enables eligible exporters to access finance through commercial banks for import of raw materials and other inputs needed for exports production.
Finance for EOUs and Units in EPZs: This facility enables units situated in EOUs and EPZs to acquire indigenous and imported machinery and other assets for export production.
Export Marketing Finance: Under this facility, exporters are provided financial assistance for implementing market development programmes and export marketing activities.
Overseas Investment Finance: Under this scheme, Indian promoters are extended financial assistance for equity participation in joint ventures set up abroad.
Forfeiting: Forfeiting is a financing mechanism that enables a company to convert a credit sale to a cash sale, on without recourse basis. EXIM Bank acts as a facilitator for the Indian exporters.
(b) Facilities for Commercial Banks:
Refinance of Export (Supplier's) Credit: It enables the commercial banks to offer credit to Indian exporters of eligible goods, who extend term credit over 180 days to the overseas importers.
Refinance of Indian Loans of EOUs: This facility enables the commercial banks to offer credit to eligible EOUs to acquire indigenous and imported machinery and other assets for export production.
Refinance of Term Loans for Computer Software Exports: This facility enables the commercial banks to extend finance for acquisition of imported and indigenous computer systems and project related assets.
Export Bills Rediscounting: Under this programme, the EXIM bank provides short term funds to the Indian commercial banks against export bills with usance not exceeding 180 days.
Bulk Import Finance: This facility enables the Indian commercial banks to extend finance to the overseas importers for import of consumable inputs in bulk.
(c) Facilities for Overseas Entities:
Line of Credit: Under this scheme, the EXIM bank offers credit to foreign governments and their agencies and overseas financial institutions to finance import of eligible goods from India.
Buyer's Credit: Under this scheme, the EXIM bank offers credit to overseas buyers to finance import of eligible goods from India on deferral credit terms.
Non-Fund based Assistance of EXIM Bank:
Non-financial services of EX1M bank include its coordinating role, its role as an international consultant and its promotional activities.
(a) Co-ordinating Role: EXIM bank is the coordinator of the working group mechanism for clearance of project and service exports and deferred payment exports valuing above Rs. 200 crore.
(b) EXIM bank as an International Consultant: EXIM bank shares its expertise in the creation and operation of financial institutions in the developing countries. Some of the examples of such services are
Feasibility study for establishment of an export credit and guarantee facility for Gulf Co-operation Council Countries.
Setting up of the Afriexim Bank, EXIM bank of Malaysia and the Export Credit Guarantee Company of Zimbabwe.
Designing and operationalising of Export Financing Programmes in Turkey and South Africa.
(c) Promotional Programmes: The promotional activities of EXFIM bank are:
Grants to Indian Firms for Multilateral Agencies Funded Projects Overseas (MFPO) bids: Under the Strategic Market Entry Support Programme, EXIM bank reimburses the Cost of tendering for Indian firms who have bid successfully for MFPO contracts.
Grants to Indian Firms for obtaining Product/Process Certification: EXIM bank provides grant upto 50% of the costs incurred by the company in obtaining product/process certification. The product/process certifications covered under the programme include ISO 14000 and QS 9000.
Grants to Indian Consultants for undertaking Services Abroad: Under the Project Preparatory Services Overseas (PPSO) Programme, the EXIM bank provides finance to the Indian Consultancy firms to take up project preparatory studies in developing countries.
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