It was assumed that India could only experience economic growth through increased domestic demand because significant barriers like inadequate infrastructure constrained export expansion.
This sparked discussions over 20 years concerning the need for an export credit agency specifically for India and the significance of commerce in the country's economic development.
To address these issues, the Export-Import Bank of India was eventually founded.
Purpose of India EXIM Bank
EXIM Bank provides many goods and services as an industry and small and medium business growth catalyst (SMEs).
These comprise pre and post-shipment services, international investment, the development of export items, the manufacture of exports and their marketing.
Offering Lines of Credit (LOC) to foreign financial institutions, sovereign governments, regional development banks, and other organisations is one of the ways the EXIM Bank supports global trade.
This makes it possible for borrowers in those nations to import equipment, supplies, commodities and services from India on delayed credit terms.
Project exports are one of EXIM Bank's main areas of interest, and the Buyer's Credit-National Export Insurance Account (BC-NEIA) program's establishment has increased the number of finance choices available.
Role Of EXIM Bank
Facilitates import and export of goods and services through financial transactions
Offers banks and other organisations refinancing services for foreign trade finance
Plays a significant role in financing the import and export of machinery
Offers financial assistance to companies to participate in joint ventures and buy overseas assets
Provides both importers and exporters with financing solutions for technological assets
Aids in the operation of Merchant Navy Banks' export and import operations by participating in the underwriting of shares, bonds, stocks and debentures for the trade of international corporations
Finances cooperative banks and offers LOCs and short-term loans to international governments and institutions
Finances international projects and offers business counselling services
Helps Indian businesses compete globally and lead their respective industries
Financial Services Offered by EXIM Bank
EXIM Bank of India offers traders a multitude of financial services to thrive in the economy.
1. Buyer’s Credit Using this scheme, overseas purchasers can import products and services on deferred payment from India by opening a "letter of credit" in the country's exporters' favour.
The programme enables exporters to compete in the global market and expand their operations while lowering the processing costs and complexity of international trade transactions.
Even though Indian businesses can finance their imports with buyer's credit from other foreign financial institutions at competitive LIBOR (London Inter-Bank Offered Rate) rates, the buyer's credit facility is only accessible to export Indian goods or services.
2. Lines of Credit
It provides LOC to help Indian exporters expand their business in existing export markets or enter new markets without worrying about foreign importers' payment obligations.
Their primary goal is to offer LOCs to Indian exporters as a useful instrument for market access and product diversity.
LOCs are granted to various foreign parties, including financial institutions, regional development banks and sovereign governments, to enable purchasers in other nations to import equipment, products and services from India on conditions of deferred credit.
EXIM Bank offers LOCs both independently and with the assistance of the Indian government.
3. Corporate Banking
It provides finance options, such as long-term loans for new projects, growth, modernisation, equipment purchases and R&D, to help Indian businesses become more export-competitive.
To encourage rural economic development and promote "brand India," they collaborate with MSMEs.
4. Project Exports
EXIM bank assists engineering, procurement and construction activities with equipment, consulting services and technological know-how.
They also support international competitive bidding for ongoing or new projects, including projects in India with multilateral funding.
5. Overseas International Finance
The Overseas Investment Finance service aids Indian businesses in entering foreign markets, acquiring new expertise and technology, and growing their operations internationally.
Additionally, it offers financial support to Indian companies constructing manufacturing facilities, infrastructure or service facilities abroad.
6. Ubharte Sitaare Programme
With financial assistance and extensive support, the objective is to improve India's competitiveness in a few key areas.
This entails finding and supporting businesses with distinctive technology, goods or processes and growing their export business.
The plan also includes helping export-oriented businesses that cannot expand because of a lack of funding.
Advisory Services by EXIM
It offers a wide range of direction, counsel and support services that aid exporters in assessing global risks, seizing export opportunities and boosting competitiveness.
They provide Indian project exporters with value-added support for projects backed by multilateral organisations.
The Export Advisory Services (EAS) team conducts individualised research for interested enterprises to build marketing plans, define market distribution routes and assess market potential.
Additionally, they help create plans for entering export markets, gaining certification for international quality and exhibiting goods at trade shows and exhibitions.
Role of EXIM Bank in Promoting Trade Relations
By offering financial support to Indian exporters and importers, EXIM Bank promotes India's trade links with other nations.
It provides lines of credit to foreign governments and purchasers and export credit and financing for international investments.
EXIM Bank works with other financial institutions and exports credit organisations worldwide to encourage international commerce and investment and raise India's export competitiveness.
Initiative Taken by EXIM Bank
The Trade Assistance Programme (TAP), an initiative from India EXIM Bank, intends to promote trade by supporting trade instruments through credit augmentation.
This programme will support cross-border trade transactions in markets with limited trade lines or untapped potential by commercial banks and financial institutions in India.
Multiple nations in South Asia, Africa, Latin America and other regions have benefited from the TAP programme, which has been used to successfully support trade transactions in a variety of sectors, including capital and engineering goods, agriculture, automotive parts, food, iron & steel, textiles, etc.
Conclusion
The bank has been instrumental in supporting and funding India's exports, which has helped the country's economy expand.
The bank has assisted small and large enterprises with a broad range of products and services in their international trade operations.
Furthermore, with an emphasis on high-value-added goods and services, the EXIM Bank's activities have also contributed to the diversification of India's export portfolio.
This has spurred economic growth, created job opportunities and improved India's export competitiveness.
FAQs on EXIM Bank
1. What is India EXIM Bank?
The Export-Import Bank of India is a specialised financial institution. The bank's primary goal is to encourage foreign trade in India by giving exporters and importers financial support, information and advisory services.
2. What are the Main Functions of India EXIM Bank?
The primary responsibility of India's EXIM is to provide financial and other types of aid to the country's importers and exporters and supervise and coordinate the operations of other organisations involved in import and export activities. Its ultimate goal is to support domestic foreign trade activities.
3. How Does India EXIM Bank Support Indian Exporters?
India EXIM Bank supports exporters by offering them loans, guarantees and export credit insurance. To assist exporters in locating viable markets and commercial prospects, it also provides advisory services.
4. What Role Does India EXIM Bank Play in Promoting Trade Relations Between India and Other Countries?
It offers financial support, facilitating corporate collaboration, finding prospective trade partners and business prospects and fostering bilateral trade connections.
5. Is India EXIM Bank a Government-Owned or Private Organisation?
India EXIM Bank is completely owned by the Government of India.
