1176384238711 export agric sarkar

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Creating Viable Export AgricultureThrough Integrated Finance:Experience with Agri-Export Zones

Presented By: Mukul Sarkar, Exim Bank

Mumbai, March 16, 2007


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Exim IndiPresentation Structure

Indias agri exports potential and constraints.

Brief background of AEZ.

How AEZ helps in establishing a value chain.

Financing needs in AEZ and Integrated Finance.Performance of AEZs.

A word on Exim Bank.


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Exim IndiIndias Agri Exports: Potential

The size of the global food trade is about USD 650 bn. Value of Indias agri exports is about USD 10 bn i.e. less than 1.50%.

India has one tenth of worlds arable land (size is more than Chinas).

It has rich and diverse agro climatic zones with more than 50 major

crops. One fifth of worlds irrigated land.

2nd largest producer of fruits and vegetables.

3rd largest producer of agri commodities (largest in food grains).


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Exim IndiAgri ExportsIndias Potential

No. 1 Producer of Tea, Mango, Banana, Cashew, Cauliflower, Okra,Pulses, Milk etc.

Largest producer, consumer and exporter of spices.

The country is a treasure house of medicinal aromatic plant species.

Exports are mainly confined to commodities. Tremendous scope forvalue addition.

In horticulture products, India has certain competitive advantages.

WTO regime provides great opportunity for exports.

Farmers can benefit from exports of high value products.


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Exim IndiAgri Exports: What Constrains Us?

Low productivity due to inappropriate cultivation practices andimproper harvest methods. This affects international competitiveness.

Inadequate infrastructure.

Too many middlemen in the procurement chain.

Lack of contract farming practices.

Quality problems due to poor post-harvest management. Inadequacyof domestic quality standards.

Not able to meet stringent SPS/Codex requirements of developedcountries.

No clear focus on exports due to vast domestic market with low quality

standards.


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Exim IndiAEZ: Concept

It was announced in the Budget 2001-02. Identifying geographically contiguous areas with similar agro climatic

conditions with potential for one or few agri products for exports.

End-to-end development of exports across the entire value chain.

Integration of various assistance programmes of both State and

Central Governments. Incentives under EXIM Policy.

APEDA is the Nodal Agency.

Other stakeholders are MOFPI, NABARD, NHB, State Govt. Agencies,Agricultural Universities, R&D organisations, Banks/FIs etc.

Aim is to induce private sector investments.


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Exim IndiAEZs in Various States

State No. of AEZ Agri Products

Maharashtra 8 Grape, wine, mango,flowers, onions,pomegranate, banana &orange.

Punjab 3 Vegetables, potatoes,Basmati rice.

West Bengal 6 Pineapple, lychee,potatoes, mango,vegetables and tea.

Karnataka 4 Gherkins, rose onion,flowers, vanilla.

Uttar Pradesh 4 Potatoes, mangoes,vegetables, Basmati rice.


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Exim IndiAEZs in India

State No. of AEZ Agri Products

Uttaranchal 4 Lychee, flowers, Basmatirice.

AP 5 Mango pulp, vegetables,mango, gherkins, chilli

MP 4 Potatoes, wheat, lentil,orange, seed.

Other States 22 Coriander, cumin,Ginger, medicinal plantetc.

Total 60


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Exim IndiGap Between Farmers and Exporters

Farmers Exporters

Inputs

Infrastructure

Storage

Transportation

Technology

Finance

Quality Assurance

Training


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Exim IndiBroken Agri Chain in India

Production

Poor extensionSupply of inputsLow productivityOutdated farmingpractices

Supply Chain Processing Marketing

High wastageLack of storage Poor transportn. Manyintermediaries

No assuredsupply of inputs

Lack ofprocessing facility

Technology

Poor infrastructureLack of grading No marketlinkages

Broken chain increases credit risk and limits credit flow


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Exim IndiWhat AEZ Offers to Improve Value Chain?

Training of farmers and strengthening of extension services. Soil testing laboratories.

Supply of quality seeds/plants.

Setting up pack houses with sorting/ grading facilities.

Greenhouses Pre-cooling units, cold storage.

Refrigerated vans

Irradiation units/ vapour and heat treatment units

Perishable cargo handling facilities at airports


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Exim IndiWhat AEZ Offers to Improve Value Chain?

Waiver of electricity duties for processing units. Transport subsidies.

Waiver of sales tax on packing materials.

International certifying agencies.

Encouraging private investments.

Promoting Contract Farming.


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Exim IndiFinancing Needs in AEZ

Farmers need finance for purchase of quality seeds, fertilizers,pesticides, harvesting equipment etc.

Service providers like cold storage, pack house, refrigerated vans,testing facilities need finance to create infrastructure.

Processors need finance to set up processing facilities and working

capital.

Exporters will need trade finance for exports.


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Exim IndiIntegrated Finance through Contract Farming

In Agri Exports, assured supply of the quality agri products is critical. Price stability can also be achieved through contract farming.

Farmers

Processors Exporters/ Retailers

ContractFarming

Buyback

Finance


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Exim IndiAdvantages of Integrated Finance?

Risk to stakeholders is minimized. Unknown risks to calculated risks.

Risks are shared among stakeholders.

Enhances credit flow to agri sector

Makes agriculture more sustainable. Overall efficiency and productivity of the chain improves.

Reduction of losses and wastage.

Improves traceability and better control on quality.


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Exim IndiPERFORMANCE OF AEZs

Total investments are about Rs.810 crores in 60 AEZs. Exports of USD 1.10 bn during the last 5 years.

Both investments and exports are less than half of the originallyprojected levels.

More needs to be done in the area of infrastructure.

AEZs for gherkins, basmati rice, mango, mango pulp, grape,walnuts, onions in different states have done well in terms ofexports.

Products with no ready local market have a better chance of

success.


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Exim Indi

SET UP BY AN ACT OF PARLIAMENT IN SEPTEMBER 1981

WHOLLY OWNED BY GOVERNMENT OF INDIA

COMMENCED OPERATIONS IN MARCH 1982

APEX FINANCIAL INSTITUTION TO PROVIDE MEDIUM AND

LONG TERM EXPORT FINANCE

Exim Bank of India

THE GENESIS


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Exim Indi

Established for providing financial assistance to exportersand importers, and for functioning as the principal

financial institution for coordinating the working of

institutions engaged in financing export and import of

goods and services with a view to promoting the countrys

international trade

(Export-Import Bank of India Act, 1981)

Objectives


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Exim Indi

Range of Products & Services

Pre-Shipment

ExportMarketing

ExportProduction

ExportProduct

Development

ImportFinance

AdvisoryServices

InvestmentAbroad

Post-Shipment

Presence Across All Stages of Business Cycle

INFORMATION

AdvisoryServices

KnowledgeBuilding

SUPPLEMENTS FINANCING PROGRAMMES

Value Based Services


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Exim Indi

Head Office

Domestic

Offices

9 Mumbai, Delhi, Kolkata, Chennai, Bangalore,

Hyderabad, Ahmedabad, Pune, Guwahati

Overseas Rep.

Offices

5 Washington D.C., Singapore, Budapest,

London, Johannesburg

Mumbai

Customer-centric organisation

Inter-Office connectivity

Organisation

OFFICES


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Exim IndiExim Banks Loan Products

Exim Bank finances only exporter or importer. Term Loan for setting up new project, expansion, modernisation, import

of machinery, technology.

Term loan for setting up JV/WOS abroad.

Financing overseas acquisition.

Pre-shipment/Post-shipment finance.

Working Capital Term Loan.

Buyers Credit.

Suppliers Credit.

Equity investments in overseas ventures. Factoring through Global Trade Finance


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Exim Indi

Exim Bank Lines of Credit (LOCs)

Enables import of Indian equipment and technology on deferred credit terms

Direct exposure on overseas borrowers

No recourse to Indian exporters

Exporters get payment on shipment

Particularly relevant for small and medium sectors

Extended to Overseas Governments, Government agencies overseas,

National or regional development banks abroad, Commercial banks abroad

GOI Lines of Credit also extended through Exim Bank

More than 60 Operative LOCs amounting to approx. US$ 2 billion in over 60

countries in Asia, Africa, CIS and Latin America

A Catalyst for Trade Promotion


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Exim Indi

Advance Payment: 10% of FOB/ CIF value

Credit offered: 90% of FOB/ CIF value

Credit Period: 5 years for capital and

engineering goods

2 years for other goods

Availability period: 18 months for opening L/c

24 months for disbursement

Basic Terms of Exim Banks LOCs


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Exim Indi

Developing countries who lack forex can buy Indiangoods on credit.

Entry mechanism for new markets/development of new

market.

Exporters receive cash payment for exports under LOC.

An arrangement for financing a number of exportcontracts under one umbrella.

Benefits of LOCs


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Exim Indi

Research Activities

Occasional & Working Papers on Agri and Agro based sectors

Floriculture

Herbal medicinal plants

Agro & Processed foods

Fresh Fruits and Vegetables and Dairy

Organic Products

Biotechnology

Vanilla

Exim Bank :


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Exim Indi

Exim Bank :

Partner in Globalisation

Technology

Capital

(Foreign Investment)

Raw Materials

Capital Goods

Final Products

Capital Goods

Capital

(Overseas Ventures)

Product

Development

Production

Marketing

Pre shipment

Post shipment

EXIM BANK


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THANK YOU

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www.eximbankindia.comwww.eximbankagro.com

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1176384238711 export agric sarkar

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