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|EXPORT-IMPORT BANK OF INDIA|
India’s International Trade
||By TC Venkat Subramanian, CMD, Export-Import Bank of India|
International trade has become a crucial component in any nation’s economic growth. Globalisation has opened up new opportunities for economic progress in developing countries through greater integration into the world economy. Increased trade has generated gains in productivity and efficiency while overcoming the limitations of resource endowments across nations.
The challenge in today’s world therefore is how to manage globalisation by designing an institutional mechanism, which ensures that a country can seize new opportunities created by globalisation. It is this objective that is subserved by Export-Import Bank of India (Exim Bank), which was established as a statutory apex financial institution in 1982 under an Act of the Indian Parliament to finance, facilitate and promote India’s international trade. It is the principal financial institution in the country for coordinating the working of institutions engaged in financing exports and imports.
Exim Bank’s vision has evolved from financing, facilitating and promoting trade and investment, to a conscious, systematic effort at creating export capabilities by arranging competitive finance. Today, Exim Bank seeks to develop commercially viable business relationships with externally oriented companies by offering them a comprehensive range of lending and service programmes.
With strong business fundamentals, the Bank proactively seeks to enhance the competitive edge of Indian companies in their internationalisation efforts through a range of financing programmes and advisory and support services at all stages of the business cycle, viz. Import of Technology, Export Product Development, Export Production, Export Marketing, Pre-shipment, Post-shipment and Investment Abroad. Exim Bank also capacitates two-way technology transfer by financing import of technology into India and investment abroad by Indian companies for setting up joint ventures/subsidiaries.
Over the years, the Bank has developed a wide range of financing products and services for promoting India’s international trade. Financing of research and development activities of exporting companies, equity participation in Indian ventures overseas, finance for software product development, and short-term finance for meeting working capital and other requirements of corporates are Bank’s initiatives in this direction.
Exim Bank has been the prime mover in encouraging project exports from India in a focused manner by providing advance information and advisory services for preparing competitive bids. The Bank provides a range of funded and non-funded facilities, by way of guarantees, to support such project exports. Post-shipment deferred credit by way of supplier’s credit/buyer’s credit is also provided on competitive terms. Financing is provided both in foreign currency and Indian rupees. Currently, 188 project export contracts valued at approximately US $ 5.5 billion are under execution in 43 countries across Asia, Africa and Europe by 42 Indian companies with Exim Bank’s support.
Lines of Credit
Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions, foreign governments and their agencies, enabling them to onlend term loans to finance imports of eligible goods from India. The Bank now has in place 57 LOCs covering more than 70 countries with credit commitments aggregating US $ 1.3 billion available for utilisation. With a number of LOCs at various stages of negotiation, Exim Bank is well positioned to catalyse and contribute to sustained performance of India’s exports.
Finance for Indian Ventures Overseas
The Bank, in order to help Indian companies in their internationalisation efforts, provides term loans to them, both for equity investment in their ventures overseas as well as for onlending purposes. Exim Bank has supported more than 100 Indian companies, largely SMEs, for equity investments in 127 ventures in 44 countries of Rs. 20.8 billion in a wide range of sectors including chemicals, packaging, software, jute and pharmaceuticals, among others. Besides, Exim Bank also undertake direct equity stake in Indian ventures abroad, to enable Indian companies to supplement their equity with Exim Bank’s contribution.
New Business Initiatives
Bank has made forays into financing of entertainment industry and the healthcare service sector, both of which offer huge export potential. Formation of the specialised Agri Business Group with committed corporate resources has underscored the increasing thrust of the Bank on agricultural exports. This has been further augmented by a conscious effort to create an enabling environment through synergies derived from a variety of institutional linkages, publishing a bimonthly newsletter, ‘Agri Export Advantage’ and setting up an in-house agro-portal (www.eximbankagro.com). Exim Bank has also taken a lead in promoting exports for rural grassroot enterprises. The Bank has signed Memoranda of Cooperation with leading NGOs and self-help groups for promoting products of village industries.
The Bank’s initiative in launching Export Marketing Service enables Indian companies to widen their export basket in terms of new buyers in larger number of countries. The Bank’s services have been sought by a number of Indian companies representing varied sectors. Exim Bank’s network of overseas offices play an active role and the services are offered on a success fee basis.
Exim Bank has consciously sought to develop useful relationships with multilateral agencies, other export credit agencies, trade and investment promotion bodies, Indian Missions abroad, commercial banks and financial institutions to help create an enabling environment to support two-way transfer of technology, trade and investment. Exim Bank, in order to enhance cooperation and forge a stronger link among the Asian Exim Banks, initiated the Asian Exim Banks Forum in 1996. While the first two meetings were held in Bangalore and Mumbai, the 11th Annual Meeting was recently hosted by the Bank in October in Goa.
Information & Advisory Services
Exim Bank supplements the globalisation efforts of Indian companies through advisory services that enable exporters to evaluate international risks, export opportunities and enhance competitiveness. Such services include search for overseas partners, identification of technology suppliers, negotiating an alliance and consummating a joint venture. Exim Bank shares institutional building capabilities worldwide in terms of providing consultancy. The Bank has provided consultancy services in setting up an Exim Bank in Malaysia and an Export Credit Guarantee Company in Zimbabwe, among others. The Bank disseminates information on export opportunities and highlights developments that have a bearing on Indian exports through its quarterly newsletter titled ‘Eximius: Export Advantage’.
Planning & Research
Exim Bank publishes several Occasional Papers and Working Papers every year dealing with industry sectors, overseas markets, and macroeconomic issues of relevance to international trade. The results of these research studies are of interest to exporters, policy makers, industrialists and export promotion agencies.
Consultancy Support Programme
The Bank has arrangements for sponsoring and part-financing Indian consultants for providing consultancy services to private sector small and medium enterprises in developing countries under Technical Assistance Programme of International Finance Corporation (IFC), Washington D. C. and other international agencies.
Skill Upgradation for Exports
The Bank has in place ‘Eximius Learning Centres’ at Bangalore and Ahmedabad for imparting specialised knowledge and training to exporting companies, particularly SMEs on various international trade related topics.
To sum, Exim Bank today functions as a strong, multi-product, diversified organisation constantly striving to reach out to Indian companies, as a facilitator, promoter and partner in their quest for excellence, growth and globalisation.
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