Export Finance

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EXPORT FINANCE

SUBMITTED TO: -
UNIVERSITY OF MUMBAI OCTOBER 2006
Project Guide: Prof. Mr. Umesh

PREFACE

In the light of growing need & importance of exports for our country it is of utmost importance that everyone should have an insight in the field of exports.

In the course of last decade, the export scenario in India has undergone a tremendous change. The liberalization initiated by the government, the keen competition in the market place & the rapid increase in the export of services have all combined to change the picture completely

This project will be covering various aspects of export finance. Areas covered in this project are related to “concept and types of export finance, financial institutions” etc.

I hope that this project would provide one, some essential information that will be useful to in future.

TABLE OF CONTENTS

Chapter. no ParticularsPage No.
1Introduction of Exports01
2Export Finance
2.1 Introduction
2.2 Concept
2.3 Objectives
2.4 Appraisal02 - 04
3Types of Export finance
3.1 Pre-Shipment
3.2 Post-Shipment 05 – 16
4Letter of Credit – One of the most common method of payment in export finance 17 - 21 5Some important Concept in Export Finance
5.1 Forfeiting
5.2 Factoring
5.3 Supplier’s Credit for Deferred Payment exports 22 – 28 6Major Financial and other Institutions
6.1 Export Import Bank of India (EXIM Bank)
6.2 Export Credit Guarantee Control (ECGC)
6.3 Reserve Bank of India (RBI) 29 – 56
7Market Development Assistance (MDA) 57 – 58
8High Court Ruling: Export Losses are not entitled to Tax Concessions 59 9Conclusion 60 – 61
10Bibliography 62

EXECUTIVE SUMMARY

FINANCE IS THE LIFE AND BLOOD OF ANY BUSINESS. Success or failure of any export order mainly depends upon the finance available to execute the order. Nowadays export finance is gaining great significance in the field of international finance.

Many Nationalized as well as Private Banks are taking measures to help the exporter by providing them pre-shipment and post- shipment finance at subsidized rate of interest. Some of the major financial institutions are EXIM Bank, RBI, and other financial institutions and banks. EXIM India is the major bank in the field of export and import of India. It has introduced various schemes like forfeiting, FREPEC Scheme, etc.

Even Government is taking measures to help the exporters to execute their export orders without any hassles. Government has introduced schemes like Duty Entitlement Pass Book Scheme, Duty free Materials, setting up of Export Promotion Zones and Export Oriented Units, and other scheme promoting export and import in India. Initially the Indian exporter had to face many hurdles for executing an export order, but over the period these hurdles have been removed by the government to smoothen the procedure of export and import in India.

CHAPTER 1 - INTRODUCTION OF EXPORTS

Export in simple words means selling goods abroad. International market being a very wide market, huge quantity of goods can be sold in the form of exports. Export refers to outflow of goods and services and inflow of foreign exchange.

Export occupies a very prominent place in the list of priorities of the economic set up of developing countries because they contribute largely to foreign exchange pool.

Exports play a crucial role in the economy of the country. In order to maintain healthy balance of trade and foreign exchange reserve. It is necessary to have a sustained and high rate of growth of exports.

Exports are a vehicle of growth and development. They help not only in procuring the latest machinery, equipment and technology but also the goods and services, which are not available indigenously. Exports leads to national self-reliance and reduces dependence on external assistance which howsoever liberal, may not be available without strings.

Though India’s export compared to other countries is very...
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