A Study of the Growth and Development of EXIM Bank in India in the Context of Increasing Exports
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Course
Growth and Development
Institution
Growth And Development
A Study of the Growth and Development of EXIM
Bank in India in the Context of Increasing Exports
Dr. Soheli Ghose
Assistant Professor, Department of Commerce (Morning)
St. Xavier‟s College (Autonomous)
Kolkata, India.
Mr. Sumit Thakur
Ex student
St. Xavier‟s College (Autonomo...
A Study of the Growth and Development of EXIM
Bank in India in the Context of Increasing Exports
Dr. Soheli Ghose
Assistant Professor, Department of Commerce (Morning)
St. Xavier‟s College (Autonomous)
Kolkata, India.
sohelighose@gmail.com
Mr. Sumit Thakur
Ex student
St. Xavier‟s College (Autonomous)
Kolkata, India.
thakursumitthakur20@gmail.com
Abstract
Credit and finance is the life and blood of export transactions due to the prevalence of
novel non-price competitive techniques encountered by exporters in various nations to
enlarge their share of world markets. The selling techniques are no longer confined to
mere quality; price or delivery schedules of the products but are extended to payment terms
offered by exporters. Liberal payment terms usually score over the competitors not only of
capital equipment but also of consumer goods. The payment terms however depend upon
the availability of finance to exporters in relation to its quantum, cost and the period at
pre-shipment and post-shipment stage. Production and manufacturing for substantial
supplies for exports take time, in case finance is not available to exporter for production.
They will not be in a position to book large export order if they don’t have sufficient
financial funds. Even merchandise exporters require finance for obtaining products from
their suppliers. This paper is an attempt to throw light on the export financing mechanism,
different types of risks faced by an exporter, the role of EXIM BANK in promoting export
finance and analysing its Financial Performance.
Key Words: EIGC, Export Finance, EXIM Bank, Post Shipment Credit and Pre Shipment
Credit.
28
, ISSN: 2349-5677
Volume 2, Issue 1, June 2015
I. Introduction
Exports are instrumental in the development of an economy, particularly developing nations.
One of the major contributory factors for promotion of export trade is the availability of
“Special Finance” both at pre and post-shipment stages. An exporter has not only to procure
the raw materials either indigenous or imported for processing the same in finished goods and
boarding them of ship/air, but also has to often allow credit terms to an overseas buyer.
Delivery period in international trade transactions is normally longer compared to the
domestic counterpart and correspondingly. The lead time for getting payment from the
overseas buyer is more. The exporter has thus to be extra cautious to ensure that the overseas
buyer is reliable one and payment for the goods/services sold/rendered will be realised
expeditiously. Therefore, the issues involved in export finance primarily involve availability
of adequate and timely finance, provision of concessional credit on order to make the export
internationally competitive, institutional support to protect the losses on account of default
risks of the overseas buyers and availability of special deferred credit for promotion of paper
exports including turnkey assignments. India to become a major player in world trade, an all
encompassing, and comprehensive view needs to be taken for the overall development of the
country's foreign trade. While increase in exports is of vital importance, we have also to
facilitate those imports which are required to stimulate our economy. Coherence and
consistency among trade and other economic policies is important for maximizing the
contribution of such policies to development. Thus, while incorporating the existing practice
of enunciating an annual EXIM Policy, it is necessary to go much beyond and take an
integrated approach to the developmental requirements of India's foreign trade. This is the
context of the new Foreign Trade Policy. In the above backdrop, this study was undertaken to
look into the various aspects of export financing in India with particular reference to the role
of EXIM BANK OF INDIA. The Export-Import Bank of India (EXIM BANK of India) is
India‟s national Export Finance Institution, fully owned by the Government of India. The
Bank is engaged in financing, facilitating and promoting India‟s two-way international trade
and investment, and seeks to enhance the international competitiveness of Indian enterprises.
Recognizing the dynamics of international trade, EXIM BANK of India‟s vision has evolved
beyond providing export credit to a conscious, systematic effort at creating international
competitiveness capabilities by arranging competitive finance and services at all stages of the
business cycle.
Government of India launched the institution with a mandate, not just to enhance exports
from India, but to integrate the country‟s foreign trade and investment with the overall
economic growth. Since its inception, EXIM Bank of India has been both a catalyst and a key
player in the promotion of cross border trade and investment. Export finance and credit are
the most important non-pricing techniques like quality, packaging and delivery to export
more. Competition both for consumer and capital goods is getting intensified in world
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