exim bank class

8/8/2019 EXIM Bank Class

1/46

Implications of Foreign Trade

Policy andFacilitation of Foreign Trade

International Business


2/46

2

Where Does India Stand Globally?

International rade o Sele t Countries in 2003

Country Ex orts I orts GD rade as % o GD

(US$ bn.) (US$ bn.) (US$ bn.)

Korea 197.6 175.5 605.0 61.7

China 438.3 393.6 1446.9 57.5

Mexico 165.4 171.0 626.1 53.7

Russia 135.9 75.4 433.5 48.7

South Africa 38.7 35.0 160.1 46.0

Argentina 29.4 13.1 129.7 32.8

Brazil 73.1 48.3 492.1 24.7India 57.0 74.3 588.8 22.3

Source: Economist Intelligence Unit

Indias share in global merchandise e ports: .8 ( )


3/46

3

Indias port Performance

Source: DGCIS, MOC&I

India's Export Performance (1999-2000 to 2003-04)

63623

47742

52856

439764414736760

29751

0

10000

20000

30000

40000

50000

60000

70000

1999-2000 2000-01 2001-02 2002-03 2003-04

Years

US$million

All Commodities Agricultural & allied productsOres & minerals Manufactured goodsPetroleum & crude products


4/46

4

Indias Import Performance

Source: DGCIS, MOC&I

India's Impo t e o mance 1999- to - 4

e r

S

o

A !

ommodities " etro e # m crude & products Non- " OL items


5/46

5

FDI and ports

Sector Share in FDI ( )

Tr or o u ry .

Co u er o w re u ry .

Che c & h r ceu c .

Tex e .

Le her & e her oo .

Serv ce ( c . Ho e & Tour ) .

Source: SI , MOC&I

Low share of FDI in major e port sectors


6/46

6

Direction of Indias Exports(Total exports in 2001-02: US$ 43.9bn)

34%

33%

15%

8%6% 3%

Europe Asia (excl. Middle East)

Middle East Africa

Others Latin America

Oceania

Latin America : 2.3% of the total export basketLatin America : 2.3% of the total export basket


7/46

7

ompos on o n a s xpor s (Total Exports in 2001-02: US$ 43.9 bn,excl. software exports of US$ 7.8 bn)

24%

17%

15%14%

13%

5%5%4% 3%

Textiles

Gems & jewellery

Engineering goods

others

Agricultural & allied

products

Chemicals & relatedproducts (excluding

drugs)Drugs, pharmaceuticals

& fine chemicals

Leather & leather

manufactures


8/46

8

Trends in Indias ExportsSelect Products

Products 1996-97 2001-02 CAGR

(US$ mn) (US$ mn) (%)

Chemicals 2841.85 4275.67 8.5

( including drugs & pharma)

Machinery and Instruments 1057.99 1731.75 10.3

Transport Equipment 969.53 994.24 0.5

Drugs and pharmaceuticals 1224.08 2051.59 10.8Drugs and pharmaceuticals 1224.08 2051.59 10.8


9/46

9

Trade Policies in India

Exim Policies

S re e r e roce ure

L ber e or re e

Thru o ex or or e o

Medium Term Export Strategy,

1% h re ob ex or by

Foreign Trade Policy

To oub e I h re ob erch e r e

by


10/46

10


Quantum Jump in Merchandise Exports

Required:

Enhance exports of major export

commodities

Identify potential export commodities

Diversify export destinations


11/46

11


Exim Bank Study Strategy for Quantum Jump in Exports:Focus on Africa, Latin America and China

India could aim to achieve:

US$ 18 billion in Africas Imports by 2007

from US$ 3.8 bn in 2003-04

US$ 4 bn in Chinas imports by 2007 (in 64

identified groups) from US$ 0.86 bn in 2000

US$ 1.8 bn in LACs imports by 2007 (in 100

identified groups) from US$ 0.6 bn in 2000

Share in Indias Exports in 2003-04: Africa (6%); Latin

America (1.8%); China (4.7)


12/46

12


Simplifying procedures and bringing downtransaction costs

Transaction costs are incurred at the pre and post-

production stages, and arise out from several procedural complexities associated withadministrative processes, availability of financeand transportation problems.

For enhancing the growth of exports it isimportant to reduce the transaction costs involved.

Exim Bank Study on Transaction Costs of IndianExports


13/46

13


Sector No. ofFirms

Transaction costs as %of export revenue (2003

Survey)

Transaction costs as% of export revenue

(1998 Survey)

Textile/Garments 23 3-10 15

Engineering goods 18 < 5 10

Pharmaceuticals 9 e 8 10

Chemicals 7 < 5 14

Computer software 9 1-5 10

Agro-Industries 2 1-2 7-8.5

Electronic & Electricalmachinery

3 5 -

Plastic components 2 5-10 -

Paper Industry 2 5-7 -

Others 7 1-2

Findings ofEx

im Banks Study


14/46


15/46

15


Special package for agriculture Duty free imports of capital goods

Will lower production cost and hence improveprofitability

Exports of medicinal plants & herbal productsfacilitated Global imports of medicinal plants: US$ 1 bn

(2001)

India second largest exporter after China

Potential to increase export to Rs. 1750 crore by2006-07 and more than Rs. 2500 crore by 2009-10.

Global market for Herbal products: US$ 80 bn

Indias exports of Herbal products: US$ 280 mn(2002-03)


16/46

16


Textile sector incentives Duty free entitlement for garments &

handicrafts increased from 3% to 5%

Will help exporters to move up the value

chain However, further incentives required to

consolidate Indias position in the post-MFA era

Handicraft Special Economic Zone to beestablished Will contribute to strong growth in

handicraft exports Will generate employment opportunities


17/46

17


Export Promotion Schemes Target Plus scheme introduced

Will further boost exports from the successful

exporters

Vishesh Krishi Upaj Yojana to boost horticulture

exports

Global trade in horticulture: US$ 79 bn (1999)

Indias exports: US$ Rs. 1830 cr (1999-2000)

Success of AEZs for horticulture depend onthe ability of the states to overcome existingshortcomings in infrastructure, institutionalmechanism and policy and programme support

to achieve desired export orientation


18/46

18


Export Promotion Schemes Services Export Promotion Council to be set

up

Served from India scheme: Service providers

who earn forex of at least Rs. 5 lakhs will be

eligible for duty credit entitlement

Will help small scale service providers

Will enhance Indias share in global

exports of services (1.4% in 2003)


19/46

19


Export Oriented Units

Exemption from service tax

EOUs permitted to retain 100% of exportearnings in EEFC accounts

Income tax benefits to DT A units which

convert to EOUs All these should considerably increase

export growth from the EOUs


20/46

20


Final Observations Import of second hand capital goods allowed

without age restrictions

No outdated technology should beimported

Special Focus Initiatives

Could be extended to other sectors of high

export orientation like chemicals &

pharmaceuticals

Export orientation of FDI should be increased


21/46

21

Commercial Banks

-Public Sectors Banks

(27)

-Private Sector Banks

(25 Old, 9 New)-Foreign Banks

(44)

-Regional Rural Bank

(196)

Investment

Institutions

-UTI

-LIC

-GIC

Financial

Institutions

-IDBI

-ICICI-IFCI

-NHB

-NABARD

Non -

Banking

Financial

Companies

(641)

State Level

Financial

Corporations/

Industrial

DevelopmentCorporations

(SFCs 18)

(SIDCs 28) Co-operative

Banks

(95,000)

Indian Financial Sector

Reserve Bank of India (Central Bank)

-Exim Bank-Exim Bank


22/46

22

Role of Institutions

Institutions dedicated for promoting

foreign trade have played an important

role towards enhancing the process of

internationalisation of Indian companies,

viz.

Export Import Bank of India, Export redit Guarantee orporation,

Indian Institute of Foreign Trade


23/46

23

Apex Financial Institution, established in 1982 under an

Act of Parliament, to finance, facilitate and promote

Indias international trade & investment

Principal financial institution in India for coordinating

working of institutions engaged in financing exports and

imports

Range of Financing Programmes

Export Credits

Finance & Investment for Export Oriented Companies

Exim Bank


24/46

24

Exim Bank

Se u by c o r e

Se e ber, 1981

Who y ow e by Gover e o I

Co e ce o er o rch, 1982

Estab she for providing financial assistance

to exporters and importers, and for functioning

as the principal financial institution for

coordinating the working of institutionsengaged in financing export and import of goods

and services with a view to promoting the

countrys international trade


25/46

25

Investment

Abroad

EXIM AT ALLSTAGES OF THE

BUSINESS CYCLE


26/46

26

A Network of 14 Offices in India andOverseas

Delhi

Chennai

Bangalore

Pune

Mumbai

KolkataAhmedabad

Head Office

+

8 Domestic Offices

Hyderabad


27/46

27

A Network of 14 Offices in India andOverseas Cont..

Washington D.C.Milan

Budapest

Singapore

Johannesburg


28/46

28

Software Training

Institutes

Minor Ports

Technology Parks

EOU Projects

Exim Bank:Financing ofExport Oriented ompanies

Term Loans

Project

Finance

Equipment

Finance

Working

Capital

Overseas

Investment Finance

Long Term

upto 5 years

Term Loans

for 1-2 years

Loans to Indian

companies for Equity

Investment in their

ventures overseas

Loans to Indiancompanies to hold on

to their overseas

ventures

Other

Programmes

Export

Marketing

Finance

Export Product

Development

Finance for

R&D

Short Term

< 1 year

Direct Equity stake


29/46

29

Multilateral gencies

World Bank

sian Development Bank

frican Development Bank

European Bank for Reconstruction & Development

Multilateral Investment Guarantee gency (MIG )

International Finance orporation (IF )

U IDO Industrial Promotion Offices

frexim Bank

Eastern & Southern frican Trade &

Development Bank (PT Bank)

Institutional Linkages


30/46

30

Export redit gencies

The Export Import Bank of hina.

roatian Bank for Reconstruction and Development.

zechExport Bank.

Hungarian Export Import Bank Ltd.

Uzbekinvest ational Export Import Insurance ompany.

Exim Bank ofRomania.

Export Import Bank of the Russian Federation.

Forum of sian ECAs



31/46

31

Board of Investment of Sri Lanka

Hatton ational Bank, Sri Lanka

China ational Technical Import & Export Corporation

PolishAgency for Foreign Investment (PAIZ).

Hungarian Investment and Trade Development Agency

U IDO Industrial Cooperation & Investment Promotion Service,

Poland

Economic Development Board, Ba

hrain

Investment & Trade Promotion Centre, Vietnam

Centero Estero Vineto, Italy

Centro Estero Camere Commercio Piemontesi, Italy.

etherlands Council for Trade Promotion.

Board of Investment ofMauritius


Trade & Investment Promotion Agencies


32/46

32

Lines ofCredit

Overseas Gover e ts

arastatal Or anisations/ Govt. encies

Co ercial Banks

Re ional Financial Institutions

Particularly relevant or SMEs

Eligible ite s allite s er issible under EximPolicy

Engineering Goods

Consumer Durables

Commodities


33/46

33

AFRICA ASIAEUROPE

ALGERIA BANGLADESH

GHANA BURUNDI INDONESIA KAZAKHSTAN

KENYA COMOROS IRAN , IRAQ BULGARIA

MALAWI DJIBOUTI SRI LANKA RUSSIA

MAURITIUS ERITREA, EGY PT KOREA ROMANIA

NAMIBIA ETHIOP IA MALAYSIA HUNGAR

SEYCHELLES KENYA THAILAND POLANDSOUTH AFRICA MALAWI VIETNAM

SUDAN MAURITIUS PHILIPPINES

TANZANIA RWANDATUNISIA SOMALIA

UGANDA SUDAN LATINAMERICA & CARIB.ZAMBIA TANZANIA

UGANDA BRAZIL MEXICO COLOMBIA

ZAMBIA JAMAICA VENEZUELA BENIN ZIMBABWE

BURKINA FASO

COTE DIVOIRE BOLIVIA COSTA RICA

MALI COLOMBIA EL SALVADOR

NIGER KENYA ECUADOR GUATEMALA

SENEGAL TANZANIA PERU HONDURAS

TOGO UGANDA VENEZUELA NICARAGUA

LOCs Extended by Exim Bank


34/46

34

Feasibility study or establishment o an ex ort creditand

guarantee acility or Gulf Cooperation Council countries

Regional coo erationin ex ort inance and ex ort credit

guarantees or ESCAP

Study on romotion o international competitivenessand

exports o manu acturedgoods or ESCAP Setting uptheAfrexim Bank

Designing o Export Financing Programmes Turkey

Exim Bank as a Consultant

Sharing Institutional Building Capabilities World wide


35/46

35

Setting upanExim Bank inMalaysia

Design o Export Marketing Seminars or SMEsinVietnam

Export DevelopmentProject : Ukraine

Enterprise Support Fund :Armenia

EstablishinganExport Credit Guarantee Company inZimbabwe

Advisory servicesto Industrial Development Corporation oSouth Africa for internationalfinance products

Mauritius Study onProjecting Mauritiusasan Investment

Hubfor Indian Firms


Exim Bank as a Consultant


36/46

36

Tie up with

International Finance Corporation, Washington D.C.

Africa Project Development Facility

Africa Enterprise Fund

Mekong Project Development Facility

South-East Europe Enterprise Development Facility

Private Enterprise Partnership (CIS Countries)

China Project Development Facility

South Asia Enterprise Development Facility

Eastern & SouthernAfricanTrade & Development Bank (PTA

Bank)

African Management Services Company (AMSCO)

Eximsponsors consultants under GoI AfDB cooperationAgreement

Promoting Indian Consultancy


37/46

37

Advisory Services

Multilateral Agencies Funded Projects Overseas (MFPO)

Informationandsupportservicesto Indian companiesto help

improve their prospectsfor securing businessinmultilateral

agenciesfundedprojects.

Dissemination of business opportunities in funded projects

Providing detailed information on projects of interest

Information on Procurement Guidelines, Policies, Practices of

Multilateral Agencies

Assistance for Registration with Multilateral Agencies Advising Indian companies on preparation of Expression

of Interest, Capability Profile

Bid Intervention


38/46

38

Lines of Credit: A catalyst for export

promotion

Direct exposure on recipient

institutions which repay on deferred

terms

No recourse to exporters

LINES OF CREDITEXTENDED BY

EXIMBANKOFINDIA


39/46

39

EXIM BANK

COMMERCIAL BANK(S) OVERSEAS BORROWER

OVERSEAS IMPORTER(S)INDIAN EXPORTER(S)

1

5 9

74 On-lending

3

6

8

1. Exim Bank signs agreement with Borrower

2. Exporter checks procedures and Service fee with

Exim Bank and negotiates contract with Importer

3. Importer consults borrower and signs contract

with exporter

4. Borrower approves contract

5. Exim Bank approves contract and advises

borrower and also exporter and commercial bank

6. Exporter ships goods

7. Commercial bank negotiates shipping

documents and pays exporter

8. EXIM Bank reimburses Commercial bank

on receipt of claim by debit to borrower

9. Borrower repays EXIM Bank on due date

Lines of CreditCont..

2


40/46

40

Advance Payment: 10% of CIF value

Credit offered: 90% of CIF value

Credit Period: 5 years for capital and

engineering goods and 2 years

for industrial manufactures

and consumer durables

Availability period: 12 months for openingL/c

18 months for disbursement

Basic ter s f xi Banks LO s


41/46

41

Equity finance to Indian companies towards theirequity contribution in overseas ventures

Direct equity participation in Indian overseas jointventures & wholly owned subsidiaries

Guarantees for JVs/WOS

Loans to Indian promoters for on lending to theirJVs/WOS

Indian Ventures verseas


42/46

42

Finance for setting up new ventures or acquisition ofexisting overseas companies

ACTIVITIES

- Manufacturing

- Marketing - Warehousing and Trading

Exim Banks aggregate support: for 90 ventures

* SteelProduction - Sri Lanka * Marketing - Netherlands

* Fine Blanking Tools - U.K. * Knitting Needles - Malaysia

*Phosphoric Acid - Jordan, Morocco * Watches - Netherlands

* Software - U.S.A., U.K. * Denim Fabrics - Mauritius

*Pharmaceuticals - U.S.A., Zimbabwe * Jute Mills - Scotland

Indian Ventures verseas (contd.)


43/46

43

INFORMATIONMarkets, Products, Countries

KNOWLEDGE BUILDING- Eximius Centre for Learning

- Research Studies

ADVISORY

SERVICES

- Multilateral Agencies-

FundedProjects Overseas

- Exim Bank as Consultant

SUPP LEMENTS FINANCING PROGRAMMES

Advisory Services


44/46

44

Feasibility study for establishment of an export credit and guarantee

facility for Gulf Cooperation Council countries.

Regional cooperation in export finance and export credit guarantees

for ESCAP.

Study on promotion of international competitiveness and exports of

manufactured goods for ESCAP.

Setting up the Afrexim Bank

Advisory ServicesExim Bankasa Consultant



45/46

45

Setting up an Exim Bank in Malaysia

Design of Export Marketing Seminars for SMEs in Vietnam

Export Development Project : Ukraine

Enterprise Support Fund : Armenia

Establishing an Export Credit Guarantee Company in Zimbabwe

Advisory services to Industrial Development Corporation of South

Africa for international finance products

Advisory ServicesExim Bankasa Consultant


Cont..


46/46

46

Exim Bank : Partner inGlobalisation

Technology

Capital (Foreign Investment)

Raw Materials

Capital Goods

Final Products

Capital Goods

Capital(OverseasVentures)

Product

Development Production

Marketing

Pre shipment

Post shipment

I

T

exim bank class

Documents