In order to further boost exports, steps have been taken to ensure greater availability of finance for exporters at concessional rates of interest. Export credit outstandings as of December 1993 represented 10.5% of bank credit.
The principal financial institution for financing, facilitating and promoting India's foreign trade is the Export Import Bank of India (Exim Bank). Its operations include deferred payment credit for exports, production loans for export oriented units, guarantees and financing of overseas joint ventures and turnkey contracts executed by Indian companies.
Financial institutions such as the Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India and State Financial Corporation also provide financial assistance to companies setting up export manufacturing projects. Loans are generally granted for a period of eight years with an initial moratorium upto two years available for the principal amount in the case of new units. Margin money requirement is 25%.
Commercial banks provide working capital assistance at the pre-shipment stage for procurement of raw materials and to meet other manufacturing costs, etc., and at the post-shipment stage by way of purchase/discount or negotiation of export bills.
The Export Credit and Guarantee Corporation (ECGC) provides export guarantees by offering risk insurance cover to exporters. It also enables exporters to obtain better facilities from banks and financial institutions by offering guarantees.
Centre for Monitoring Indian Economy, Bombay
Contact Addresses for More Information
Last updated: May 1995.