Govt.

Agencies for
International Business and
It’s Policy

A Presentation
Debajyoti Dasgupta
Student,
European Management Institute,
New Delhi
 Where Does India Stand Globally ?Exim India
International Trade of Select Countries in 2003
Country Exports Imports GDP Trade as % of GDP
(US$ bn.) (US$ bn.) (US$ bn.)
Korea 197.6 175.5 605.0 61.7
China 438.3 393.6 1446.9 57.5
Mexico 165.4 171.0 626.1 53.7
Russia 135.9 75.4 433.5 48.7
South Africa 38.7 35.0 160.1 46.0
Argentina 29.4 13.1 129.7 32.8
Brazil 73.1 48.3 492.1 24.7
India 57.0 74.3 588.8 22.3
Source: Economist Intelligence Unit
 India’s share in global merchandise exports: 0.8% (2003)

2
 India’s Export Performance Exim India

India's Export Performance (1999-2000 to 2003-04)

70000
52856 63623
60000
44147 43976
50000 47742
36760
US$ million

40000
30000
29751
20000

10000

0
1999-2000 2000-01 2001-02 2002-03 2003-04
All Commodities Years Agricultural & allied products
Ores & minerals Manufactured goods
Petroleum & crude products

Source: DGCIS, MOC&I through Exim India

3
 India’s Import Performance Exim India

India's Import Performance (1999-2000 to 2003-04)

90000
80000
77237
70000 61572
60000 51588
49799 50056 56613
US$ million

50000
40000
30000 37172

20000
10000
0
1999-2000 2000-01 2001-02 2002-03 2003-04

All Commodities Years

Petroleum crude & products Non-POL items

Source: DGCIS, MOC&I

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 Trade Policies in India Exim India

 Exim Policies
 Streamlined trade procedures
 Liberalised import regime
 Thrust on export orientation
 Medium Term Export Strategy, 2002
 1% share in global exports by 2007
 Foreign Trade Policy 2004-2009
 To double India’s share in global merchandise trade
by 2009

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 Role of Institutions Exim India

 Institutions dedicated for promoting

foreign trade have played an important
role towards enhancing the process of
internationalisation of Indian companies,
viz.
 Export-Import Bank of India,
 Export Credit Guarantee Corporation,
 Indian Institute of Foreign Trade
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 Exim Bank Exim India

 Set up by an act of parliament in

September, 1981
 Wholly owned by Government of India
 Commenced operations in march, 1982
 Established “for providing financial assistance to
exporters and importers, and for functioning as
the principal financial institution for
coordinating the working of institutions engaged
in financing export and import of goods and
services with a view to promoting the country’s
international trade…”
7
 Foreign Trade Policy 2004-
Exim India
09
Quantum Jump in Merchandise Exports
Required:
 Enhance exports of major export

commodities
 Identify potential export commodities
 Diversify export destinations
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 Foreign Trade Policy 2004-
Exim India
09
Exim Bank Study “Strategy for Quantum Jump in Exports:
Focus on Africa, Latin America and China”
 India could aim to achieve:
 US$ 18 billion in Africa’s Imports by 2007 from
US$ 3.8 bn in 2003-04
 US$ 4 bn in China’s imports by 2007 (in 64
identified groups) from US$ 0.86 bn in 2000
 US$ 1.8 bn in LAC’s imports by 2007 (in 100
identified groups) from US$ 0.6 bn in 2000
 Share in India’s Exports in 2003-04: Africa (6%); Latin
America (1.8%); China (4.7)
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 Lines of Credit Exim India

 Overseas Governments
 Parastatal Organisations/ Govt. Agencies
 Commercial Banks
 Regional Financial Institutions
 Particularly relevant for SMEs
 Eligible items – all items permissible under Exim Policy
 Engineering Goods
 Consumer Durables
 Commodities

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 LOCs Extended by Exim Bank
Exim India

AFRICA ASIA EUROPE

ALGERIA PTA BANK covering BANGLADESH

GHANA BURUNDI INDONESIA KAZAKHSTAN
KENYA COMOROS IRAN , IRAQ BULGARIA
MALAWI DJIBOUTI SRI LANKA RUSSIA
MAURITIUS ERITREA, EGYPT KOREA ROMANIA
NAMIBIA ETHIOPIA MALAYSIA HUNGARY
SEYCHELLES KENYA THAILAND POLAND
SOUTH AFRICA MALAWI VIETNAM
SUDAN MAURITIUS PHILIPPINES
TANZANIA RWANDA
TUNISIA SOMALIA
UGANDA SUDAN LATIN AMERICA & CARIB.
ZAMBIA TANZANIA
UGANDA BRAZIL MEXICO COLOMBIA
BOAD covering ZAMBIA JAMAICA VENEZUELA
BENIN ZIMBABWE
BURKINA FASO CAF covering BCIE covering
COTE D’IVOIRE BOLIVIA COSTA RICA
MALI EADB covering COLOMBIA EL SALVADOR
NIGER KENYA ECUADOR GUATEMALA
SENEGAL TANZANIA PERU HONDURAS
TOGO UGANDA VENEZUELA NICARAGUA
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 Foreign Trade Policy 2004-09 Exim India

Simplifying procedures and bringing down

transaction costs:-
1.Transaction costs are incurred at the pre and post-
production stages, and arise out from several
procedural complexities associated with
administrative processes, availability of finance
and transportation problems.
2.For enhancing the growth of exports it is important
to reduce the transaction costs involved.
3.Exim Bank Study on Transaction Costs of Indian
Exports.
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 Foreign Trade Policy 2004-09 Exim India
Findings of Exim Bank’s Study
Sector No. of Transaction costs as % Transaction costs as
Firms of export revenue (2003 % of export revenue
Survey) (1998 Survey)
 
Textile/Garments 23 3-10 15

Engineering goods 18 <5 10

Pharmaceuticals 9 8 10

Chemicals 7 <5 14

Computer software 9 1-5 10

Agro-Industries 2 1-2 7-8.5

Electronic & Electrical 3 5 -

machinery
Plastic components 2 5-10 -

Paper Industry 2 5-7 -

Others 7 1-2  

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 Foreign Trade Policy 2004-
Exim India
09
Transaction Costs: International Experience
 Simplified and less stringent bureaucratic
procedures like single window clearance and
business friendly approach
 Better technology due to higher levels of foreign
investment, faster loading/unloading methods
 Flexible labour laws
 Cheap availability of power and raw materials,
 Freight incentives by the Government,
 Lower ocean freight rates due to greater
availability of vessels
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 Foreign Trade Policy 2004-
Exim India
09
Special package for agriculture
 Duty free imports of capital goods
 Will lower production cost and hence improve
profitability
 Exports of medicinal plants & herbal products
facilitated
 Global imports of medicinal plants: US$ 1 bn
(2001)
 India second largest exporter after China
 Potential to increase export to Rs. 1750 crore by
2006-07 and more than Rs. 2500 crore by 2009-10.
 Global market for Herbal products: US$ 80 bn
 India’s exports of Herbal products: US$ 280 mn
(2002-03)

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 Foreign Trade Policy 2004-
Exim India
09
Textile sector incentives
Textile sector incentives
 Duty free entitlement for garments & handicrafts
increased from 3% to 5%
 Will help exporters to move up the value
chain
 However, further incentives required to
consolidate India’s position in the post-MFA
era
 Handicraft Special Economic Zone to be
established
 Will contribute to strong growth in
handicraft exports
 Will generate employment opportunities
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 Foreign Trade Policy 2004-
Exim India
09
Export Promotion Schemes
Export Promotion Schemes
 Target Plus scheme introduced
 Will further boost exports from the successful
exporters
 Vishesh Krishi Upaj Yojana to boost horticulture
exports
 Global trade in horticulture: US$ 79 bn (1999)
 India’s exports: US$ Rs. 1830 cr (1999-2000)
 Success of AEZs for horticulture depend on “the
ability of the states to overcome existing
shortcomings in infrastructure, institutional
mechanism and policy and programme support to
achieve desired export orientation”
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 Foreign Trade Policy 2004-
Exim India
09
Export Promotion Schemes
 “Services Export Promotion Council” to be set
up
 “Served from India” scheme: Service providers
who earn forex of at least Rs. 5 lakhs will be
eligible for duty credit entitlement
 Will help small scale service providers
 Will enhance India’s share in global
exports of services (1.4% in 2003)
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 Exim Bank as a Consultant
Exim India

Sharing Institutional Building Capabilities World wide

 Feasibility study for establishment of an export credit and

guarantee facility for Gulf Cooperation Council countries
 Regional cooperation in export finance and export credit
 guarantees for ESCAP
 Study on promotion of international competitiveness and
exports of manufactured goods for ESCAP
 Setting up the Afrexim Bank
 Designing of Export Financing Programmes - Turkey

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 Exim Bank as a Consultant
Exim India
Sharing Institutional Building Capabilities World wide
 Setting up an Exim Bank in Malaysia

 Design of Export Marketing Seminars for SMEs in Vietnam

 Export Development Project : Ukraine

 Enterprise Support Fund : Armenia

 Establishing an Export Credit Guarantee Company in

Zimbabwe

 Advisory services to Industrial Development Corporation of

South Africa for international finance products

 Mauritius – Study on Projecting Mauritius as an Investment

Hub for Indian Firms
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 Promoting Indian Consultancy
Exim India
Tie-up with
 International Finance Corporation, Washington D.C.
 Africa Project Development Facility
 Africa Enterprise Fund
 Mekong Project Development Facility
 South-East Europe Enterprise Development Facility
 Private Enterprise Partnership (CIS Countries)
 China Project Development Facility
 South Asia Enterprise Development Facility
 Eastern & Southern African Trade & Development Bank (PTA
Bank)
 African Management Services Company (AMSCO)
 Exim sponsors consultants under GoI-AfDB cooperation Agreement
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 Advisory Services
Exim India
Multilateral Agencies Funded Projects Overseas (MFPO)

Information and support services to Indian companies to help

improve their prospects for securing business in multilateral
agencies funded projects.
 Dissemination of business opportunities in funded projects
 Providing detailed information on projects of interest
 Information on Procurement Guidelines, Policies, Practices of
 Multilateral Agencies
 Assistance for Registration with Multilateral Agencies
 Advising Indian companies on preparation of Expression
of Interest, Capability Profile
 Bid Intervention
22
Foreign Trade Policy 2004-
Exim India
09
Export Oriented Units
 Exemption from service tax
 EOUs permitted to retain 100% of export
earnings in EEFC accounts
 Income tax benefits to DTA units which
convert to EOUs
 All these should considerably increase
export growth from the EOUs
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 Exim Bank:
Financing of Export-Oriented CompaniesExim India
Term Loans

Project Equipment Working Overseas Other

Finance Finance Capital Investment Finance Programmes

EOU Projects & Short Term Loans to Indian Export

TUFS < 1 year companies for Equity Marketing
Investment in their Finance
Software Training Term Loans ventures overseas
Institutes for 1-2 years Export Product
Loans to Indian Development
Long Term
Minor Ports upto 5 years companies to olden to
their overseas Finance for
ventures R&D
Technology Parks
Direct Equity stake

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 Institutional Linkages
Exim India
Multilateral Agencies
 World Bank
 Asian Development Bank
 African Development Bank
 European Bank for Reconstruction & Development
 Multilateral Investment Guarantee Agency (MIGA)
 International Finance Corporation (IFC)
 UNIDO - Industrial Promotion Offices
 Afrexim Bank
 Eastern & Southern African Trade &
 Development Bank (PTA Bank)

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 Institutional Linkages
Exim India
Trade & Investment Promotion Agencies

 Board of Investment of Sri Lanka

 Hatton National Bank, Sri Lanka

 China National Technical Import & Export Corporation

 Polish Agency for Foreign Investment (PAIZ).

 Hungarian Investment and Trade Development Agency

 UNIDO Industrial Cooperation & Investment Promotion Service, Poland

 Economic Development Board, Bahrain

 Investment & Trade Promotion Centre, Vietnam

Centero Estero Vineto, Italy 26

 Institutional Linkages
Exim India

Export Credit Agencies

 The Export-Import Bank of China.

 Croatian Bank for Reconstruction and Development.

 Czech Export Bank.

 Hungarian Export-Import Bank Ltd.

 Uzbekinvest – National Export-Import Insurance Company.

Exim Bank of Romania. 27

 Institutional Linkages
Exim India
Trade & Investment Promotion Agencies

 Board of Investment of Sri Lanka

 Hatton National Bank, Sri Lanka

 China National Technical Import & Export Corporation

 Polish Agency for Foreign Investment (PAIZ).

 Hungarian Investment and Trade Development Agency

 UNIDO Industrial Cooperation & Investment Promotion Service, Poland

 Economic Development Board, Bahrain

 Investment & Trade Promotion Centre, Vietnam

Centero Estero Vineto, Italy 28

 Exim Bank : Partner in Globalisation
Exim India
Technology  Final Products
Capital (Foreign Investment) EX
PO  Capital Goods
Raw Materials RT
Capital Goods  Capital
(Overseas
I Ventures)
M
P
O
R  Product
T Development
 Production
O N
I TI  Marketing
D D
VALUE A  Pre shipment
 Post shipment
29
 Foreign Trade Policy 2004-
Exim India
09
Final Observations
 Import of second hand capital goods allowed
without age restrictions
 No outdated technology should be
imported
 “Special Focus Initiatives”
 Could be extended to other sectors of
high export orientation like chemicals &
pharmaceuticals
 Export orientation of FDI should be increased
30
 FDI and Exports Exim India

Low share of FDI in major export sectors

Sector Share in FDI
(%)
Transportation industry 7.50
Computer software industry 6.46
Chemicals & 5.70
pharmaceuticals
Textiles 1.20
Leather & leather goods 0.20
Source: SIA, MOC&I
Services (incl. Hotels & 8.37
Tourism) 31
 Exim India

THANK
THANK YOU
YOU

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