Explain in detail the role of EXIM bank in India’s foreign trade.
Export-Import Bank (EXIM Bank) came into under the Export-Import Bank of India Act 1981.The bank is the primary export finance institution of the country, set up to promote Indian foreign trade. The bank also coordinates various institutions engaged in exports and imports. The Operational Philosophy of EXIM Bank emphasis its functional roles in promotion of Indian foreign trade. It encompasses:
- To make exporters competitive on the basis of financial terms offered by them.
- To provide Indian exporters with alternate financial solutions and enable them to become competent internationally.
- To provide relevant and timely information to Indian exporters about export opportunities in various areas of export.
- To provide currency advice to Indian producers to enable them make cost-competent exports.
- To provide marketing and production finance to Indian manufacturers to make their products internally competitive.
- To Took into the problems of Indian, exporters and work on policies for resolution.
The bank also plays a critical role in partnering Indian industries in their globalization efforts. The bank provides assistance in various financial, marketing and technical aspects to accelerate growth of Indian economy. The bank engages into various programs and services in the interests of Indian exporters, commercial banks, financial institutions to promote foreign trade in the country.
Indian exporters are provided with supplier’s credit, Pshipment credit, import finance, besides deferred credit against technology and consultancy services to foreign buyers. Under the Import finance scheme, the bank finances export related imports like computers systems, software, machinery, plant for installation / upgrading / expansion of production etc.
EXIM Bank offers credit facility for setting up export-oriented units, export processing zones, Domestic Tariff Areas (DTA) and units exporting at least 25% of their total annual sales. Indian companies seeking equity share in joint ventures abroad are also availed credit facility by EXIM bank.
The bank offers facilities like export bill discounting, refinance of export credits and term loans for Commercial Banks of India. Short-term export bills (for which usance period is not more than 180 days) of small scale industrial units can be discounted with EXIM bank.
The bank also offers loans to importers, financial institutions and foreign government. Term finance is availed for importing eligible goods and services to government and other financial institutions. EXIM banks also avails credit facility to international banks. These banks relend credit to overseas clients for importing Indian goods. Along with commercial banks, the EXIM Bank issues guarantee for exports and imports in form of retention money and advance performance payment.