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Export financing by way of term loans for project exports, buyers credit and lines of credit : the role of Exim Bank. Presentation by Mr. Yaduvendra Mathur, Chairman & Managing Director Export Import Bank of India, Geneva, March 28, 2014 EXPORT-IMPORT BANK OF INDIA Slide 2 Indias International Trade Source: Ministry of Commerce & Industry, Government of India Towards Increased Global Integration through Trade Indias total merchandise trade increased over two-fold from US$ 312 bn in FY 2007 to US$ 791 bn in FY 2013 Trade-GDP ratio increased from 32.9% in FY 2007 to 43% in FY 2013 Exports-GDP ratio increased from 13.3% in FY 2007 to 16.3% in FY 2013 Share of India in world merchandise export 1.6% in 2012; Rank 19 (up from 26 th in 2007) Slide 3 Indias Export Destinations 2002-03 (US$ 53 bn ) Indias Export: Shifting Southwards Indias Export Destinations 2012-13 (US$ 300 bn) Direction of exports moving towards the Southern countries, particularly Asia and Africa region Share of Asia, Africa and LAC regions increased sharply from 51.1% in 2002-03 to 65.0% in 2012- 13; Of this, share of Asia region rose from 43.1% to 50.8% during this period Future trade flows to be geared towards the developing nations (buttressed by GOI policies) Source: Ministry of Commerce & Industry, Government of India Slide 4 SET UP BY AN ACT OF PARLIAMENT IN SEPTEMBER 1981 WHOLLY OWNED BY GOVERNMENT OF INDIA COMMENCED OPERATIONS IN MARCH 1982 APEX FINANCIAL INSTITUTION OBJECTIVES: for providing financial assistance to exporters and 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 shall act on business principles with due regard to public interest (Export-Import Bank of India Act, 1981) Export-Import Bank of India Slide 5 Leadership and Expertise in Indias Export Finance Comprehensive Range of Products And Services All Stages of the Export Business Cycle 1982-85 1986-94 Export Credits Exim Bank TODAY Export Capability Creation Product Centric Approach Customer Centric Approach To develop commercially viable relationships with a target set of externally oriented companies by offering them a comprehensive range of products and services, aimed at enhancing their internationalisation efforts Evolving Vision Slide 6 Range of Products & Services Pre- Shipment Export Marketing Export Production Export Product Development Import Finance Advisory Services Investment Abroad Post- Shipment INFORMATION Advisory Services Knowledge Building SUPPLEMENTS FINANCING PROGRAMMES At All Stages of Export Business Cycle Value Based Services to Exporters FINANCING, FACILITATING INDIAS TWO WAY TRADE & INVESTMENT Slide 7 Financing Programmes Financing Program (Various Currencies) Export Credit Medium / Long Term Lines of Credit Buyers Credit Suppliers Credit Short Term Pre / Post Shipment Credit Import Credit Import Loan for capital goods Bulk Import Loan for Raw Materials Loans for Exporting Units Term Loans for expansion/ diversification / new projects/ export product development/ export marketing / research & development Term Loans for overseas equity investment Direct equity stake in Indian/ Overseas ventures of exporting companies Slide 8 Lines of Credit LOC - A Catalyst for Trade Promotion Exim Bank gives special emphasis on extension of Lines of Credit (LOCs) as an effective market entry mechanism Exim Bank extends export LOC to overseas financial institutions, regional development banks and foreign governments and their agencies LOCs enable buyers in those countries to import developmental and infrastructural projects, equipment, goods and services from India, on deferred credit terms LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters Slide 9 Lines of Credit Programme Lines of Credit (LOCs) Exims own LOCs to economically strong developing countries and regional development banks At behest of GOI, concessional LOCs to developing countries in Asia/ Africa/ Latin America/ CIS and Oceania with a long-term perspective. While Exim raises the resources and funds disbursement, GOI guarantee and provide interest equalisation support under Indian Development and Economic Assistance Scheme (IDEAS) Status of LOCs as on March 20, 2014 No. of LOCs operative: 189 No. of countries covered:75 Total amount of LOCs sanctioned : US$ 10.33 billion Slide 10 Colombo- Matara Railway Line Exim Bank has extended two Lines of Credit (LOCs) aggregating USD 167.40 million to the Government of Sri Lanka (GOS) for Upgradation of Southern Railway Corridor from Colombo to Matara in Sri Lanka New Delhi, March 10- Lines of Credit worth more than $1 billion extended by India to Ethiopia have helped the landlocked country build its sugar and power industries and rail network, Ambassador Gennet Zewide said. Ethiopia has been net importer of sugar for so many years. We were the third largest importer of sugar. Earlier $200-300 million annually was spent on sugar but after the line of credit came in we are not importing sugar. We are rather selling. By 2015 we are going to be net exporter of sugar. We will export to European Union countries. PRESS REPORTS Slide 11 Coverage area under irrigation has increased more than two fold from 24,500 ha in 2006-07 to 65,000 ha in 2008-09. Rice production in the region has also gone up by 177% from 130,000 tonnes in 2006-07 to 360,000 tonnes in 2008-09. Now, around 40% of the rice demand of Northern Senegal could be met by local production, as compared to the earlier 19% of local demand. Reduced the import bill of food products as also generated employment as field workers (particularly women farmers) and servicing staff of equipment. Under the LOC of US$ 27 mn to Senegal an Indian company in January 2007, manufactured, supplied and installed 2394 diesel engine pump sets in rice producing zones of Senegal Success Story: Senegal Agro-processing plant - Malawi Equipments supplied, installed, commissioned and training provided by an Indian Company under the LOC of US$ 30 mn to Govt. of Malawi, for One Village One Product Programme (OVOP) and Small Holders Irrigation Programme. Project helped create jobs and livelyhood in those region. Slide 12 Exim Bank Promoting Project Exports Exim Bank plays a pivotal role in promoting and financing project exports. Exports of projects and services, broadly categorised into: Civil engineering construction projects, Turnkey projects, Consultancy services, and Supply contracts on deferred payment terms Projects valued upto USD 100 mn can be approved by Exim Bank or any other Authorised dealers, over USD 100 mn are to be approved by Working Group. Exim Bank coordinates the Working Group Mechanism. Apart from regulatory approvals, Exim Bank extends funded & non-funded facilities. Over the past two decades, increasing number of contracts have been secured by Indian companies in Asia, Sub Saharan Africa, CIS, Latin America. Such projects supplement the efforts of the host country governments in achieving their developmental objectives. Projects Under Execution with Exim Bank Support (As on December 31, 2013) No. of Contracts:343Value of Contracts: US$ 23.03 billion No. of Countries: 72No of Indian companies : 91 Slide 13 Exim Bank : Supporting Projects & Services Exports from India to Africa Turnkey contract for Gas Based Power Project in Tanzania funded by The World Bank. Transmission Line Projects in Algeria, Tunisia, Ethiopia, Kenya, Libya, Zambia Telecommunications Network Project in Ghana Turnkey contract for Multi-Product Pipeline Project & Road Construction Project in Sudan Power Station Project in Egypt. Consultancy assignment in Cement Plant in Nigeria. Supplies for Urban Power Rehabilitation Project in Uganda. Construction of Cyber Towers & Conference Center in Mauritius. Electricity interconnection project between Cote dIvoire and Mali. Rural Electrification Project in Senegal. Agricultural Development Project in Mauritania. Facilitating and supporting Infrastructure Development Slide 14 Exim Bank: Supporting Projects & Services Exports from India to Other Regions Power generation & transmission line projects in UAE, Saudi Arabia, Qatar, Vietnam, Myanmar Laos, Kazakhstan, Belarus, France, Ukraine, Georgia, Supply of machinery & transport equipment- Bangladesh, Myanmar, Suriname, Honduras Oil and gas- Qatar, Oman, Thailand, Singapore, Myanmar Transportation & railway line projects- Sri Lanka, Nepal, Malaysia Consultancy services for Hydroelectric Project- Nepal, Laos Engineering & Construction projects- Cuba, Guyana, Australia, Cambodia, Malaysia, Jordan Construction of dams- Saudi Arabia, Bhutan, Sri Lanka Telecommunications Network Project in Qatar, Malaysia, UAE, Turkmenistan, Sri Lanka Irrigation projects in Guyana, Laos Sugar Projects in Fiji Islands Facilitating and supporting Infrastructure Development Slide 15 Exim Bank: Supporting Projects & Services Exports from India to Other Regions during FY 2014 Slide 16 Access to Indian technologies and products at competitive price Indian technology Triple A Appropriate Adaptable Affordable Developmental and infrastructure projects Transfer of technology Capacity building Concessional interest rates and long repayment periods with moratorium Benefits of LOC and Project Exports recipient countries Slide 17 Providence Cricket Stadium in Georgetown, Guyana, where several matches of the World Cup 2007 were played, was designed and constructed by an Indian Company with financial assistance by Exim Bank. Slide 18 Modernization and upgradation of workshop, supply of 41 coaches, 3 locomotives, 2 Diesel Multiple Units and pick-up vehicles and buses. Coaches are operating between Namibe and Matala (434 km) carrying, both passenger and freight traffic. Provides cheaper mode of transportation as compared to road Facilitated exploration of Kassinga Mines deposit bed (iron ore) in the municipality of Jamba Huila Province. Farmers using railway to transport their agricultural products to interior regions at reasonable price. Locomotives and coaches were supplied by Indian Company for rehabilitation of Railway in Angola under the GOI-supported LOC of US$ 40 mn Success Story: Angola Success Story: Ghana Landmark and monumental structure in entire West African region Symbol of enhanced Indo-Ghana relationship Provided jobs to semi-skilled and un-skilled labourers of Ghana A landmark structure to house Seat of the Government and Presidency has been constructed by an Indian company financed under the GOI-supported LOC to Ghana. Slide 19 Buyers Credit under NEIA (BC-NEIA) Buyer's Credit under GOIs National Export Insurance Account (BC-NEIA) program, was a pioneering innovation lead by the Ministry of Commerce & Industrys (MOCI) to promote and boost project exports from India. MOCI, in conjunction with Exim Bank and ECGC, launched this initiative in April 2011. BC-NEIA is a unique financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters and serves as an effective market entry tool to traditional as well as new markets in developing countries, which need deferred credit on medium or long term basis. BC-NEIA is extended by the Exim Bank to the governments of recipient countries or to the underlying project authorities backed by a sovereign guarantee. NEIA, through ECGC, provides Exim Bank cover upto 100% for the facility and also cover for exchange rate fluctuation till repayment of the credit. Slide 20 Buyers Credit under NEIA (BC-NEIA) The Indian project exporter is backed by a tailored financing package that meets the funding needs of the project, without impacting the balance sheet of the Indian project exporter. Indian exporters can obtain payment of eligible value from Exim Bank, without recourse to them, against negotiation of shipping documents. The Exporter continues to be responsible for the timely and satisfactory execution of the project, but is free from commercial and political risks arising out of the financing. Facility to cover 85% of contract value, higher amounts can be considered on a case-to-case basis. A minimum of 75% of the goods and services under the credit facility is expected to be exported from India. A suitable relaxation, not exceeding 10%, may be considered for exceptional reasons, especially in case of projects having civil construction. Tenor of the Buyers Credit can normally be upto 15 years. Slide 21 Financing for Overseas Investments Financing Equity Investments/ Acquisitions / JVs Comprehensive assistance: o Pre investment advisory services; Finance through debt and equity Finance available for: o Greenfield projects; Brownfield expansion; o Overseas acquisitions directly or through special purpose vehicles Loan against Equity; loans to Overseas Indian Ventures; direct equity participation in Indian ventures abroad. As on December 31, 2013, Exim Bank has provided finance to 470 ventures set up by more than 376 companies in 80 countries. So far, aggregate assistance extended to overseas investments amounted to around US$ 6 bn. Slide 22 Promoting Overseas Investments Coal and Coke- Australia, Indonesia, Sinagpore Electrical and electronics- Bangladesh, Brazil Textiles and clothing- Bangladesh, Switzerland Energy- Brazil, Canada, Indonesia, Netherlands, USA Pharmaceuticals- Brazil, China, Uganda Packaging- Turkey, China, Nigeria Steel- Chile, China, Netherlands, Sri Lanka, UAE, UK Rubber- Kenya Chemicals- Germany, Jordan, Malaysia, Netherlands, Morocco, Taiwan, UAE, USA Glass- USA, Germany, Sri Lanka, Automobile Industry- Germany Fertilizers- Ghana, Morocco, Irrigation- Mauritius, Israel Metals- Italy, Tanzania Supporting Two Way Investments Slide 23 Financing for Research & Development Financing R&D Activities of EOUs Extended to any Export Oriented Unit (EOU) by way of term loan (senior / subordinated) or equity participation or as a hybrid product Also extended to Research Foundations/ Institutes/ SPVs promoted by companies eligible for financing Eligible expenditure to cover capital as well as revenue expenditure Exim Bank facility restricted to 80% of the total financing requirement Tenor generally not exceeding 7 years Slide 24 Exim Bank and SMEs A special group handling SME Seeks to help Indian SME sector to establish their products overseas and enter new markets through Exims overseas offices and MOU partner network Set up a Technology and Innovation Enhancement and Infrastructure Development (TIEID) Fund exclusively for MSMEs by partnering with the banks/FIs. The fund seeks to meet medium- and long-term foreign currency loan requirement of Indian Exporting entities in the MSME sector. Received approval from ADB for a term loan of US$ 100 mn (for a tenor of up to 7 years) to extend sub-loans to SMEs and SME clusters in select states of India Competitive Financing for SMEs Slide 25 Grassroots Initiative and Development - Supporting Exports From Rural India Marketing of Bamboo Craft Products and improving Packaging and Presentation Mechanization of Incense Sticks (Agarbatti) rolling activity Cluster of companies propagating traditional system of Indian medicines for setting up a common infrastructure facility Enterprise sourcing tasar silk products, to enhance exports and higher productivity and income levels of women Society working in the field of education & health, for upgrading and modernising its existing unit producing various types of handicrafts including bamboo and natural fibre based products Handloom cluster, for visual merchandising of the product, e-tailing, and establishment of yarn bank and website upgradation Artisans and farmers cooperative society, which produces naturally dyed silk and wool textiles for purchase of machineries for dyeing Financial support to rural grassroots enterprises Slide 26 Organizations supported under GRID ECO TASAR SILK PVT. LTD. : Formed in association with Masuta Producer Company Limited (a producer company promoted by PRADAN, the shareholders of which are the Weavers from its TASAR project in Jharkhand and Bihar). Bank has sanctioned Pre-Post Shipment Credit/Working Capital facility during 2012 towards part financing the cost of procurement of raw materials to meet export order requirement towards off-the-loom products on handlooms in Bhagalpur working with 1200 artisans. Product range consists of scarves, stoles, shawls, sarees, throws and dupattas. INDUSTREE CRAFTS PVT. LTD. : Is a Bangalore based profit organization which specializes in using locally available natural materials such as river grass, banana bark yarn and palm leaves amongst others to create objects of everyday use, which works with 300 artisans. SAHAJ AN ORGANIZATION FOR WOMEN;S DEVELOPMENT : Is a registered trust and is working with more than 1200 tribal women artisans and nearly 700 tribal families. The main activities include Bead work, Bamboo basketry and furniture, Paper Mache, Beaded Jewellery, Wood carving, furniture, Block Printing, Stuffed toys, etc. Slide 27 Training and Workshops conducted. EXIM Bank conducted a ten-days Design Development &Training Workshop for 30 rural women artisans in the area of coconut shell crafts from March 13-22, 2013 in Marcel, Goa. The workshop imparted training to women artisans with a view to improve the scope of their income generation through new design and development of marketable products based on the craft and skill level of artisans. The initiative resulted in developing of 25 prototypes having international appeal in the said craft. Organized a 15 days training cum workshop programme for 60 master artisans for Handloom Products in association with Impulse Social Enterprise Private Limited, Shillong recently, in Golaghat District of Assam. The main objective was to impart training to the skilled master artisans to improve their understanding and quality consciousness of handloom products, in the larger context of improving the scope of income generation through new design and development of marketable products based on the craft and skill level of artisans. Slide 28 Impact Improving Packaging, Presentation and Marketing of Bamboo Craft Products, URAVU, Wayanad, Kerala : Promotes bamboo craft for ensuring livelihood sustenance of rural poor, especially women. Exim Bank conceptualized a bamboo pen Script O. Exim Bank intervention has helped : Increase the brand value of URAVU through promotional videos and other packaging and design workshop. Productivity of workers almost doubled and standardization of process helped them reduce cost to one-third. Tie up with Village Store, Mumbai helped them get ` 20 lakhs worth of orders. Mechanization of Agarbatti rolling activity, ORMAS, Bhubaneswar, Odisha : The objective being mechanization in rural enterprises for their efficient capacity building. Exim Bank loan of ` 5 lakhs through GRID has helped : 400% increase in productivity from 2kg/day up to 10 kg/per day. 400% increase in income from ` 18/day to ` 90/day. Change in aspiration to people, Improved access to healthcare and Importance given to education of children. Easy replication of the machines has helped ORMAS to further scale up the project. ECO Tasar Silk Pvt. Ltd. : Impact in the Value Chain. A. Yarn Makers : 1000 women yarn makers get sustenance on account of their association with ECO Tasar. Slide 29 Impact cont 1000 women yarn makers get sustenance on account of their association with ECO Tasar. ` 1 cr worth of cumulative wages generated. Only wild silk from Jharkhan and Assam tribal's is sourced. B. Handloom Weavers: Cumulative sales resulted in weaving of 1,05,918 metres just for the exports market. Overall, over 238000 metres woven materials were sold. The business has been able to generate ` 1.2 cr worth of wages and has created job opportunities for almost 290 weavers on a full time basis. C. Finishers and other service providers inHandloom Chain : The business has been able to generate ` 47,60,000/- as wages for approx. 124 persons. Slide 30 Eximius Centers of Learning for knowledge building & capacity creation for SMEs Bangalore / Pune / Ahmedabad. Set up to organize seminars and workshops for the benefit of exporting companies. Workshop on Indian Economy and Economic Survey Interactive Session on Financing Options for Project Exports Export Potential Seminars Trade and Investment Opportunities Seminars Subjects include : Exim Bank - Skill Upgradation International trade & investment Export marketing Sector and country specific programmes Quality Packaging Business opportunities in multilateral agencies funded projects Seminars / Workshops Slide 31 Exim Bank - Promotional Activities Knowledge Building: Research Publications R esearch Studies on products, sectors, countries, macro economic issues relevant to international trade and investment Sector Studies assessing export potential Indian Horticulture; Chemicals ; Biotechnology; Indian Automotive Industry Technology Intervention in Indian Agriculture Strategic Development of MSMEs Bilateral Trade and Investment Studies SAARC; GCC; ASEAN; West Africa; MERCOSUR; Southern Africa Development Community (SADC); Cambodia, Laos, Myanmar, Vietnam (CLMV) Myanmar; China; Russia; France; UK Exim Newsletters Export Advantage (bilingual) Agri Export Advantage (in English, Hindi and 10 regional languages) Indo-China Newsletter (bilingual) Slide 32 Promotional Activities Feasibility study for setting up the Afreximbank, Exim Malaysia Establishing an Export Credit Guarantee Company in Zimbabwe Designing of Export Financing Programmes Turkey, South Africa Mauritius Study on Projecting Mauritius as an Investment Hub for Indian Firms Commissioned to design, develop and Implement Programme on Film Financing for NEXIM Bank, Nigeria Feasibility study for establishment of an export credit and guarantee facility for Gulf Cooperation Council countries Exim Bank as Consultant Slide 33 New Initiative: Financing Infrastructure Projects Slide 34 Project Development Company (PDC) Main Objective- To identify and/or develop infrastructure projects across African Continent in order to create opportunity for diverse set of Investors to Develop, Operate and Invest in Infrastructure Sector in Africa Proposed Initial Equity Capital : USD 25 mn. with contribution of USD 5 mn. from each partner Leverage the strengths of stakeholders and their Group companies across the value chain of Project Development and implementation related activities. AIM Create a pipeline of Bankable projects Mitigation of technical & financial risks Remove/minimize the bottlenecks related to approvals Long term environment sustainability Minimization of implementation time Capacity building of the local Government Strengthening of local entrepreneurial capacity Involvement of local stakeholders AIM Create a pipeline of Bankable projects Mitigation of technical & financial risks Remove/minimize the bottlenecks related to approvals Long term environment sustainability Minimization of implementation time Capacity building of the local Government Strengthening of local entrepreneurial capacity Involvement of local stakeholders Slide 35 Business Focus The project development activities shall involve, but not limited to the following; Technical Advice and assistance in analyzing projects, including preparation of project proposals, review and revision of project proposals, environmental and social impact analysis Policy advocacy related activities e.g. identification, promotion and dissemination of best practices in infrastructure development Undertake the preparation of new studies, pre-feasibility or feasibility studies, update or additional analysis of existing studies, pre-feasibility studies, feasibility studies, environmental and social impact assessment, design studies and other related studies in order to improve on the project quality and enhance prospects to attract financing for the projects Preparation of the Procurement documents including EOIs, RFPs for engagement of Technical/Financial Consultants Capacity building of the relevant Stakeholders. Slide 36 Project Sourcing.. The PDC would work closely with host Government agencies and local entrepreneurs in the following domains: Infrastructure projects which the PDC would identify on its own, and seek a mandate from the concerned Government authority to develop on a PPP framework; Projects sourced through private clients Conventional Transaction Advisory mandates for Infrastructure projects from local Governments It is expected that the PDC will also seek mandates from the concerned Government authority to develop, finance and implement the infrastructure projects through bidding process or nomination basis depending upon the extant policies of the Government. Slide 37 Operational Eco System PDC Multilateral/ DFIsGoI African Private Sector Indian/Multinat ional Private Sector Infra. Partners African Govt/Agencies Promoters' Capabilities leveraged for Development, Financing and Operations of identified Infrastructure Projects Slide 38 Proposed Institutional Structure Chief Executive Officer Country-level Nodal Agency/ Infrastructure Dev. Board Project Specific Special Purpose Vehicle (SPV) (Techno-Economic Feasibility Studies, land, concession, Financing Arrangement etc to be housed in the SPV) Investment Facilitation in Country Level Clearances/Approvals Selection of Implementation Agency Institutional Linkage PDC Investment Recovery of Investment & Development Fee IL&FS JV EXIMSBI SPECIFIC PROJECT DEVELOPMENT AfDB Slide 39 Shikli Development for Capacity Building Programmes : Member institutions could organize training programmes/workshops on specific topics such as overseas investment finance, sme financing, cluster financing, country risk, project financing. Joint Research/Field Studies: 2/3 focus region/sectors, eg. Development of cotton/textile industry in West Africa; experts from GNEXID members can pool-in expertise; partner with local financial institution, ITC, UNCTAD, to undertake the developmental project work. Tele-conference/video conference Calls: CEOs could have tele-conference calls, as a follow-up to the steering committee meeting to review/track status of action points; sharing of ideas/information about regional development in member countries as also potential areas of cooperation G-NEXID Web Portal: enhance the depth and news of the members with one nodal officer from each institution; members to actively provide monthly updates LC Confirmation facility among members: facilitate bilateral among members Web telecast of key events Strengthen GNEXID Office: Expert (from office of presidential institution now Bladex) could be in regular touch with GNEXID office. Expert could undertake periodic visits to meet officials from UNCTAD/ITC/UNIDO, etc which are based in Geneva, with a view to explore/ discuss potential areas for cooperation. VISION FOR G-NEXID Slide 40 Slide 41 THANK YOU THANK YOU THANK YOU THANK YOU Visit Exim Bank of India @ www.eximbankindia.in