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The EXIM bank of India and its role in India’s exports

EXIM Bank plays a key role in promoting India’s economic growth and trade. Learn more about its services and role in exports from India.

The Export-Import Bank of India, commonly known as the EXIM Bank, is a financial institution established by the Government of India in 1982. Its role is to promote and finance India’s international trade by providing financial assistance to exporters and importers.

What is the EXIM bank of India?

EXIM bank operates in a variety of sectors, including agriculture, engineering, textiles, and chemicals. The bank has played a significant role in promoting India’s economic growth and global trade, helping Indian businesses compete in the global market and expand their presence abroad. The bank has also collaborated with several international financial institutions to support Indian businesses globally¹.

Purpose of EXIM bank of India

The key purpose of the EXIM Bank is to offer financial support to exporters through pre-shipment and post-shipment credit, along with export finance solutions. It extends credit insurance to safeguard exporters against the uncertainties of foreign customers not paying. In its role of encouraging global growth, the bank aids Indian firms in making international investments, thereby expanding their operations and global reach. EXIM bank delivers advisory services to Indian companies to transfer the first-hand information about crucial aspects of international trade like market research, trade regulations, and risk management.

Functions of EXIM bank

Here are some of the key functions of EXIM bank²:

Export credits:

EXIM bank supports the working capital requirements of Indian exporters. It also provides export credit to importers and global customers to facilitate the purchase of goods from India.

Exports credit insurance:

It provides export credit insurance to Indian exporters to protect them against the risks of non-payment by overseas buyers.

Overseas investment finance:

It provides finance to Indian companies that invest overseas to expand their business and increase their global presence.

Line of credit:

EXIM bank extends lines of credit to overseas entities, including governments, to promote Indian exports.

Advisory services:

This bank provides advisory services to Indian companies on various aspects of international trade, including market research, trade regulations, and risk management.

Research and information:

It conducts research on international trade and provides information on trade-related matters to Indian businesses.

Promoting Indian exports:

EXIM bank supports Indian exporters by extending lines of credit, providing guarantees and counter-guarantees, and promoting Indian exports in international markets.

Supporting project exports:

This bank provides finance and guarantees to Indian companies that undertake projects overseas, supporting the growth of Indian engineering, construction, and consultancy services.

Enhancing competitiveness:

EXIM bank’s finance and advisory services help Indian businesses enhance their competitiveness in the global market, including by providing market research, trade regulations, and risk management support.

Supporting government initiatives:

It supports the Indian government’s initiatives to promote exports, including the Make in India program, and collaborates with other government agencies and international financial institutions.

Financial services offered by EXIM bank

The role of Export Import Bank of India in offering financial services entails⁴:

Exports finance:

Pre-shipment credit is provided to exporters to finance the purchase of raw materials and other inputs needed to manufacture goods for export. Post-shipment credit is provided to exporters to finance the period between shipment of goods and receipt of payment from overseas buyers.

Imports finance:

EXIM bank provides import finance to Indian businesses to finance their imports of capital goods and raw materials. This helps Indian businesses to access the inputs they need to manufacture goods for export.

Role of EXIM bank in promoting trade relations

The EXIM bank has promoted various ‘Made in India’ products like handmade paper, handicrafts, garments, marine products, spices, agri-equipments, and fresh fruits in international markets such as Singapore, Brazil, the Middle East, and the US. To facilitate the export of these products, the bank works closely with the MAS Group to organize workshops and events to help businesses in product design and packaging for the international market. Exim Bank’s Marketing Advisory Services (MAS) Group helps Indian companies sell their products abroad better. They use bank’s reputation worldwide and their knowledge about international markets to make Indian companies more competitive globally. The group is physically there to support Indian companies in their efforts to market their products in other countries, and they only get paid if these efforts succeed.

Initially, EXIM bank focused on providing export credit, but over the years, it has transformed into an institution that supports Indian industries, especially Small and Medium Enterprises (SMEs), in their efforts to expand globally. The bank offers a comprehensive range of products and services at all stages of the business cycle — from importing technology and developing export products to export production, marketing, pre-shipment and post-shipment credit, and overseas investment.

Initiatives by EXIM bank

Following are the major initiatives taken by the EXIM bank⁶:

• This bank offers a comprehensive range of funded and non-funded facilities, guarantees, information, and advisory services to support project exports from India.
• It played a vital role in facilitating Indian project exporters to secure contracts in various sectors, including mining, energy, and transportation, in the CIS region.
• The bank also offers information, advisory, and support services to Indian companies participating in projects funded by multilateral agencies such as the Asian Development Bank, the World Bank, and the European Bank for Reconstruction and Development (EBRD).
• To support Indian companies in globalization, EXIM bank provides term loans for equity investment in overseas ventures and lending purposes.
• In the CIS region, Exim bank has supported Indian companies in establishing joint ventures, particularly in sectors like pharmaceuticals (seen in Kazakhstan, Ukraine, and Uzbekistan).
• EXIM bank has established Global Procurement Consultants Ltd. (GPCL), a consultancy firm offering procurement-related services to multilateral funding agencies.
• GPCL has successfully completed projects in the CIS region, including countries like Armenia, Georgia, Kyrgyzstan, and Uzbekistan.
• EXIM Bank's joint venture, Global Trade Finance Limited (GTF), provides structured foreign trade financing products such as factoring and forfeiting.
• GTF offers factoring facilities to exporters with credit protection cover in CIS member countries like Armenia, Azerbaijan, Belarus, Russia, Tajikistan, and Ukraine⁶.

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Frequently Asked Questions

What is the importance of India’s EXIM bank?

The importance of Indian EXIM bank is to support India’s export-import activities and international trade.

How does India’s EXIM bank support Indian exporters?

Indian EXIM bank provides funding, credit, and advisory services for exporting.

Is EXIM bank regulated by the RBI?

Yes, EXIM bank is regulated by the RBI.

What is the EXIM policy in India?

The EXIM policy in India sets guidelines for India’s import and export activities.

What are the objectives of EXIM?

The objectives of EXIM revolve around promoting India’s international trade and economic growth.

Published on August 29, 2023.

Sources:
1. https://www.eximbankindia.in/
2. https://www.investindia.gov.in/team-india-blogs/export-import-bank-india-exim-bank-overview-functions-and-significance
3. https://www.paisabazaar.com/saving-schemes/what-is-exim-bank/
4. https://www.icicibank.com/business-banking/sme-banking/trade-and-forex/exim-bank-of-india.page
5. https://www.ijrar.org/papers/IJRAR19D1348.pdf
6. https://commerce.gov.in/international-trade/trade-promotion-programmes-and-schemes/trade-promotion-programme-focus-cis/exim-bank-initiatives
7. https://www.eximbankindia.in/marketing-advisory-services

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