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What we do

  • Help exporters/importers comply with all government & banking regulations

  • Develop import /export plan for importers/exporters

  • Provide exporters/importers with required import/export data & statistics

  • Reduce transaction & financing cost for exporters/importers

  • Arranging competitive LCBD, Buyers Credit, Factoring, LC confirmation, RA Finance LC quotes 

  • Help Exporters/importers avail all govt benefits and schemes​

Requirements for an Exporter/Importer

Requirement
Exporter
Importer
IEC (Import Export Code from DGFT)
Yes
Yes
Bank Account
Yes
Yes
CHA (Customs House Agent) for filing Shipping Bill with Customs*
Yes
Yes
Freight Forwarder*
Yes
Yes
Transaction documents as per regulatory & banking norms
Yes
Yes
Insurance*
Yes
Yes
EDPMS/IDPMS Compliance
Yes
Yes
LEI (Legal Entity Identifier)*
Yes
Yes
Sanctions compliance
Yes
Yes

Key Benefits for Exporters

  1. Earning in Foreign Currency (FX): Currency Appreciation Benefits, Exporters earn in foreign currencies, which are generally on an appreciating trend. The government ensures exchange rate stability, helping maintain the competitiveness of Indian exports in the global market. Foreign Exchange (FX) Market Trends: The government's commitment to preventing depreciation of the Indian Rupee (INR) ensures that exporters receive favorable FX rates for their products.

  2. Earn Premium on Forward FX DerivativesExporters can leverage forward FX derivatives to sell foreign currencies at favorable exchange rates, allowing them to earn a premium on future transactions. This helps maximize earnings and manage currency risk effectively.

  3. Exchange Earners Foreign Currency (EEFC) AccountEEFC Account Benefits: Exporters can open an EEFC account with Indian banks to hold foreign currency balances. These balances can be retained for up to 60 days, giving exporters flexibility and the ability to take advantage of favorable exchange rates when converting currencies.Exporters’ Currency Management: This account helps manage foreign currency flows, reducing the need to convert foreign earnings into INR immediately, and allowing exporters to benefit from favorable FX rates.

  4. Access to Cheaper Foreign Currency LoansLower Interest Rates on FX Loans: Exporters can take advantage of cheaper financing through foreign currency loans, which typically have lower interest rates compared to loans in INR. This provides a cost-effective financing option for exporters looking to expand operations.

  5. Interest Equalization Scheme for MSME ExportersGovernment Subsidy on Export Credit: Small and Medium Enterprises (SMEs) benefit from the Interest Equalization Scheme that reduces interest rates on pre/post-shipment rupee export credits.Rs 50 Lakh Interest Reduction: The scheme allows MSME exporters to avail of interest reductions of up to Rs 50 lakh per financial year, significantly lowering the cost of financing and promoting export growth.

  6. DGFT Schemes for Exporters

  • Duty Exemption Schemes: Exporters can benefit from Duty Exemption Schemes such as Advance Authorization (AA) and Duty-Free Import Authorization (DFIA), which allow the import of goods without paying customs duties. These schemes are available for goods used in export production, reducing overall export costs.

  • Duty Drawback (DBK) Scheme: Under the Duty Drawback (DBK) scheme, exporters receive a refund on the customs duties paid on raw materials or components used in exported products. This helps reduce the cost of production and increase profitability.

  • RoSCTL (Rebate on State and Central Taxes and Levies): The RoSCTL scheme, notified by the Ministry of Textiles, provides rebates on state and central taxes and levies for exported products, reducing the overall cost for textile and apparel exporters. 

  • RoDTEP (Remission of Duties and Taxes on Exported Products): The RoDTEP scheme, administered by the Department of Commerce and the Department of Revenue, offers a rebate for duties and taxes on exported products, providing a further boost to exporters by reducing taxes on export.

INCOTERMS

 

First published by ICC (International Chamber of Commerce) in 1936, Incoterms® rules provide internationally accepted definitions and rules of interpretation for most common commercial terms used in contracts for the sale of goods. 

 

Incoterms define the responsibility of the seller and the buyer and also the stage where risk transfers from the seller to the buyer.

 

Incoterms 2020 is the latest version that came into force on 1 January, 2020 and defines 11 terms, as follows. 

 

  1. EXW – Ex Works

  2. FCA – Free Carrier

  3. CPT – Carriage Paid To

  4. CIP – Carriage Insurance Paid To

  5. DAP – Delivered At Place

  6. DPU – Delivered at Place Unloaded

  7. DDP – Delivered Duty Paid

  8. FAS – Free Alongside Ship

  9. FOB – Free On Board

  10. CFR – Cost and Freight

  11. CIF – Cost, Insurance and Freight

 

For details on each incoterm, please click on the link - https://www.tradefinanceglobal.com/incoterms/ 

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Payment Terms

 

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Payment Term
Sub Term
Definition
Buyers Risk
Sellers Risk
Advance
Payment before shipment of goods
Very high
low
DA/DP
DA
Documents against Acceptance. Bank releases title documents or issues BRO/DO (where goods are consigned to bank) only upon receipt of acceptance from buyer. Payment will be made at a defined later date.
Relatively low
Relatively high
DP
Documents against Payment. Bank releases title documents or issues BRO/DO (where goods are consigned to bank) only upon receipt of payment from buyer
high
high
LC
Letter of Credit. Bank’s undertaking to pay upon presentation of complying documents.
Relatively high
low
Open account
Buyer takes possession of the goods before making the payment.
low
Very high

​Import Finance​

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Types of import financing products

  • Usance/Deferred payment LC

  • Buyers credit & Suppliers Credit

  • Reverse Factoring

  • RA finance LC

  • Import finance in FC

  • Co-acceptance/Avalization

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Letter of Credit/Documentary Credit (Usance/Deferred payment terms)

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A Letter of Credit (LC) or Documentary Credit is an irrevocable and definite undertaking by an issuing bank to honour a complying presentation. An issuing bank will pay against a complying presentation even if the buyer does not pay for any reason. If the presentation is discrepant, then the issuing bank is not obligated to pay, they’ll only pay if they receive buyer’s acceptance. LC facility is extended by a bank as part of non fund based credit facility.  

 

LCs are broadly of 2 types, sight or usance/deferred payment. 

  • Sight LC : Payment to be made at sight, UCP 600 allows 5 banking days to make payment against complying presentation. Documents are released to the buyer only upon receiving payment from the buyer.

  • Usance/deferred payment LC : Payment to be made at an agreed upon later date, UCP 600 allows 5 banking days to accept a complying presentation. Documents are released to the buyer only upon receiving acceptance from the buyer.

 

​RA finance LC

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RA Financing is a form of Trade credit structure wherein reimbursing bank acts as a lender on the basis of the LC, funds the Exporter’s bank/claiming bank of a trade against a reimbursement claim on sight/ as per LC terms. The LC issuing bank pays back the reimbursing bank as per the terms.

Features & Benefits

  • Seller and Buyer can negotiate on sight basis and negotiate a better deal.

  • Through this mechanism, applicant gets access to funding from international markets.

  • Multiple financing locations for the beneficiaries. Beneficiaries can choose the geography and bank of their choice.

  • Expertise in processing & quick turnaround of transactions.

 

TRADE CREDIT

Trade Credits (TC) refer to the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for maturity, for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the Government of India. Depending on the source of finance, such TCs include suppliers’ credit and buyers’ credit from recognised lenders.

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BUYER'S CREDIT

Buyers Credit backed by SBLC is one where the advance is made to the Importer by a lender against a SBLC (MT 760) issued by a bank for making payment of Import Bill & on due date the SBLC issuing bank will repay the lender.

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SUPPLIER'S CREDIT

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  • Under Supplier’s credit, Letter of Credit (LC) is the underlying instrument which is issued by the Importers / Buyers Bank in which funding is being done directly to supplier of goods.

  • The Suppliers Credit facility is to extended after obtaining authenticated Acceptance advise from the LC Opening Bank through SWIFT, confirming the acceptance of the documents under the LC and advising the due date and undertaking to remit the bill amount on the due date.

  • The suppliers’ Credit system works on the presumption that the tenor of the Letter of Credit is usance, whereas we shall pay to the beneficiary through their banker on sight basis.

 

BENEFITS

  • Easy access to Foreign Currency Funds sitting in India.

  • Advantage of same Time Zone

  • Dedicated Relationship Manager

 

FEATURES

  • Period: For Import of Capital Goods -3- years from the date of shipment & For non-capital goods, this period shall be up to one year or the operating cycle whichever is less.

  • Amount: Up to USD 150 million or equivalent per import transaction for oil/gas refining & marketing, airline and shipping companies. For others, up to USD 50 million or equivalent per import transaction.

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FACTORING

Factoring refers to the practice of selling accounts receivable (invoices) to a third party, called a factor, at a discount to improve cash flow and manage working capital. It’s a common financial strategy for businesses seeking immediate funds instead of waiting for customers to pay their invoices. 

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FEATURES

  • Generate Invoices: A business provides goods or services and issues invoices to customers.

  • Sell Invoices: The business sells these invoices to a factoring company at a discount.

  • Immediate Cash: The factor advances a percentage (typically 70%-90%) of the invoice value.

  • Customer Payment: The factor collects payment directly from the customer.

  • Settlement: Once the customer pays, the factor releases the remaining amount (minus fees).

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BENEFITS

  • Improved Cash Flow: Immediate access to working capital.

  • Growth Opportunities: Funds can be reinvested in inventory, marketing, or expansion.

  • Credit Risk Management: In non-recourse factoring, the factor assumes customer credit risk.

  • No Debt: Factoring isn’t a loan, so it doesn’t increase liabilities on the balance sheet.

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Import finance in Foreign Currency

Similar to and sub-limit of Working Capital limits like CC/OD.

Can be drawn like CC/OD but in Foreign Currencies like USD, EUR etc.

Interest costs are lower compared to INR financing as lending rates are linked FX benchmark rates like SOFR.

Easy to avail with less documentation and compliance burden.

Only few banks offer this facility.

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Co-acceptance/Avalization

Banks can co-accept D/A Trade Bills already accepted for payment by the buyer. Co-accepting bank is obligated to pay on due date of such bills even if the buyer refuses or is unable to pay. Other banks can discount/purchase such co-accepted bills.

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Export Finance

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Types of export financing products

  • Packing Credit in Foreign Currency or INR (PCFC/EPC)

  • Post Shipment Finance in Foreign Currency or INR

  • Export LC backed Bill Discounting/Negotiation

  • Export Bill Negotiation or Purchase

  • Factoring

  • Forfaiting

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IDPMS/EDPMS

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IDPMS

The Import Data Processing and Monitoring System (IDPMS) is a digital platform created and used by the Reserve Bank of India (RBI) to track and monitor import-related payments and transactions. It helps ensure that the actual goods importers have paid for, have entered the country and that foreign exchange remittances are settled properly. 

 

How IDPMS works

  • Whenever an import payment is made, banks create an ORM entry in IDPMS

  • Whenever any goods are imported in India, Customs creates a BOE entry in IDPMS

  • Banks thoroughly check and knock off corresponding ORM-BOE entries in IDPMS upon receiving importers instructions

  • Importers are responsible for closure of all IDPMS entries within timelines stipulated by RBI.

 

EDPMS

The Export Data Processing and Monitoring System (EDPMS) is a digital platform created and used by the Reserve Bank of India (RBI) to track and monitor export-related payments and transactions. It helps ensure that the actual goods have been exported against the receipt of export payments and that foreign exchange remittances are settled properly. 

 

How EDPMS works

  • Whenever an export payment is received, banks create an IRM entry in EDPMS

  • Whenever any goods are exported from India, Customs creates a SB entry in IDPMS

  • Banks thoroughly check and knock off corresponding IRM-SB entries in EDPMS upon receiving exporters instructions

  • exporters are responsible for closure of all EDPMS entries within timelines stipulated by RBI.

 

Consequences of IDPMS/EDPMS non compliance

Banks penalise entities who exhibit regular non compliance. RBI may caution list the entities with high value long standing overdues, i.e., complete prohibition on import/export transactions. In extreme cases, where the entity is non cooperative, such cases are reported to Enforcement Directorate (ED).

TRADE/BANK DOCUMENTS

Commercial Documents
  • Purchase Order/Proforma Invoice (PO/PI)
  • Commercial Invoice (CI)
  • Packing list
  • Certificate of Origin

Financial Documents
  • Bill of Exchange/Draft
  • Negotiable Bill of Lading​

Transport Documents
  • Bill of Lading  (BL) - Marine transport
  • Airway Bill (AWB) - Air transport
  • Lorry Receipt (LR) - Road transport
  • Railway Receipt (RR) - Rail transport

Documents required by Banks
  • Customer Request Letter
  • FEMA declaration
  • Declaration certifying goods are freely importable and not restricted or prohibited
  • Contract Copy/PO/PI/CI
  • Transport document
  • Bill of Entry/Shipping Bill
  • Insurance document
  • Certificate of Origin

 

Top Imported/Exported Products​

 

Top Imported Products

Sl no
Product
Value (USD bn)
1
Mineral fuels/oils
220.57
2
Electronics/Electrical equipment
73.4
3
Precious metals/gemstones/jewellery
72.58
4
Mechanical machines/appliances
58.22
5
Organic chemicals
27.25
6
Plastics
22.58
7
Iron & Steel
18.9
8
Edible oils & fats
16.56
9
optical/medical/surgical equipment
13.2
10
Fertilizer
10.42

Top Exported Products

Sl no
Product
Value (USD bn)
1
Mineral fuels/oils
89.33
2
Precious metals/gemstones/jewellery
33.41
3
Electronics/Electrical equipment
32.1
4
Mechanical machines/appliances
29.39
5
Pharmaceutical products
21.42
6
Automotive
20.85
7
Organic chemicals
19.47
8
Iron & Steel
11.82
9
Cereals
11.29
10
Articles of iron or steel
9.8

Top Importing/Exporting Countries for India

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Top Exporting Countries to India

Sl no
Country
Value (USD bn)
1
China
121.92
2
Russia
67.07
3
USA
42.11
4
UAE
37.52
5
Saudi Arabia
34.65
6
Iraq
29.83
7
Indonesia
24.02
8
South Korea
19.63
9
Japan
18.75
10
Switzerland
18.57

Top Importing Countries from India

Sl no
Country
Value (USD bn)
1
USA
75.79
2
UAE
33
3
Netherlands
23.11
4
China
16.24
5
UK
13.4
6
Singapore
12.03
7
Bangladesh
11.25
8
Saudi Arabia
10.83
9
Germany
9.66
10
Hong Kong (CN)
8.72
TRADE AGREEMENTS

A Trade Agreement  is a pact between two or more countries or regional blocs designed to reduce or eliminate trade barriers through mutual negotiations. The primary goal of a Trade Agreement is to enhance trade flows, promote economic cooperation, and foster development among the participating nations. They can be comprehensive, encompassing not just goods but also services, investment, intellectual property, competition policies, government procurement, and other trade-related areas.

Key Objectives Behind India’s Trade Agreements

 

  1. Diversification and Expansion of Export Markets: Trade Agreements enable India to reduce its reliance on a limited number of trading partners. By opening new export markets, these agreements help Indian businesses tap into opportunities across various regions, enhancing trade volumes.

  2. Cheaper Access to Raw Materials and Intermediate Goods: Selective reduction or elimination of tariffs ensures cost-effective imports of:

                   a.  Raw materials.

                    b. Intermediate products

                    c. Capital goods.

    3.Advancing India’s Interests in Services: India seeks better market access in sectors like IT, healthcare, and                         education through its Trade Agreements. Negotiations focus on removing barriers in modes of service delivery                 where India holds a competitive advantage.

    4.Attracting Foreign Investment: They act as a tool to attract foreign direct investment (FDI) by offering preferential              treatment to investors. This fosters manufacturing growth, creates employment opportunities, and enhances                    competitiveness in global markets.

    5.Geopolitical Strategy: Trade Agreements are integral to India’s Act East Policy, which emphasizes                                            stronger economic ties with ASEAN countries, Asia-Pacific nations and many more.

For In depth coverage of some important agreements:

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RBI (Reserve Bank of India)

 

The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.

Manager of Foreign Exchange, amongst other functions.

  • Manages the Foreign Exchange Management Act, 1999.   

  • Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India.

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RBI guidelines on the following subjects are stipulated in the Master Directions issued by RBI.

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Exim Bank
​

Exim Bank serves as a vital financial institution in India, offering innovative products and services to promote international trade and enhance the competitiveness of Indian businesses. This guide explores Exim Bank's key offerings, including Buyer’s Credit, Corporate Banking, Lines of Credit, and the Ubharte Sitaare Programme.

 

1. Buyer’s Credit: Empowering Indian Exporters:

​Features of Buyer’s Credit

  • Facilitates exports by providing credit to overseas buyers for importing Indian goods and services.

  • Supports deferred payment contracts, offering cash flow benefits to Indian exporters.

  • Non-LC transactions save costs by eliminating LC-related charges.

Benefits

  • Offers attractive interest rates compared to host country borrowing costs.

  • Ensures smooth project execution with medium and long-term financing.

Eligibility Criteria

  • Foreign project companies awarding contracts to Indian exporters.

  • Applicable for infrastructure development, professional services, and export projects.

Documentation Required

  • Request letter from the exporter.

  • Non-negotiable shipping documents.

  • Promissory note for the contract value.

  • Trust receipt for financed consignment.

  • Authorization letter for disbursement.

 

https://www.eximbankindia.in/buyers-credit

2. Corporate Banking: Comprehensive Financing Solutions

A. Finance for Corporates

  1. R&D Finance

  • Encourages export-oriented R&D to enhance capabilities.

  • Financing available for export-oriented units and SPVs.

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     2.Pre-shipment and Post-shipment Credit

  • Provides working capital to exporters for trade financing needs.

  • Supports fund-based and non-fund-based limits, including LCs and guarantees.

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     3.Lending for Export-Oriented Units

  • Funds modernization, diversification, and export-product development.

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      4.Import Finance

  • Loans for equipment imports to enhance domestic and export production capabilities.

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      5.Production Equipment Finance.

  • Supports the acquisition of machinery and ancillary equipment for modernization and export readiness.

 

B. Finance for Grassroots Enterprises

  • The GRID programme promotes rural enterprises with export potential.

  • Offers capacity building, certification support, and export capability development.

3. Lines of Credit (LOC): Expanding Global Opportunities

  • Supports Indian exporters in entering new markets or diversifying exports.

  • Provides financing to overseas financial institutions, governments, and entities.

  • Ensures at least 75% of contract value is sourced from India.

  • Exempt from taxes and duties in the recipient country.

4. Ubharte Sitaare Programme: Identifying Future Export Leaders

Programme Goals

  • Enhance India’s export competitiveness through financial and technical support.

  • Help companies with unique technologies and products grow in global markets.

Support Offered

  1. Financial Support:

    • Equity or equity-like instruments.

    • Debt for modernization and capacity building.

  2. Technical Assistance:

    • Certification costs, training, market studies, and feasibility analysis.

Eligibility

  • Small and mid-sized companies (turnover up to INR 500 crore).

  • Strong business models with global market potential.

  • Sectors include automobiles, IT, textiles, pharmaceuticals, and more.

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For more broader understanding of this programme:  https://www.eximbankindia.in/ubharte-sitaare

DGFT (Directorate General of Foreign Trade)

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What is DGFT?

The Directorate General of Foreign Trade (DGFT) is the principal agency under the Ministry of Commerce and Industry, Government of India. It plays a crucial role in formulating and implementing India’s import and export policies. DGFT aims to foster economic growth by enhancing India’s trade relations with other countries.

With a network of regional offices, DGFT promotes seamless import and export operations throughout the nation.

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Functions of DGFT

  1. Policy Implementation:

    • Formulates and enforces Foreign Trade Policy to promote trade growth.

  2. Licensing Authority:

    • Issues licenses for exporters, importers, and businesses engaging in international trade.

  3. Trade Regulation:

    • Manages prohibitions, restrictions, and regulations on import and export services.

  4. Notifications and Circulars:

    • Issues public notices, circulars, and notifications related to foreign trade policies.

  5. IEC (Importer Exporter Code):

    • Grants the mandatory IEC, a unique registration required for international business operations.

  6. Introduction of Schemes:

    • Launches various trade benefit schemes like EPCG, Merchandise Exports from India Scheme (MEIS), and DFIA.

  7. ITC (HS) Code Management:

    • Maintains the ITC (HS Code):

      • Schedule-1: Import items in India.

      • Schedule-2: Export items from India.

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Key Benefits of DGFT for Indian Businesses

  1. Global Market Access:

    • Enables businesses to expand their reach into international markets, unlocking new growth opportunities.

  2. Trade Facilitation:

    • Simplifies import-export operations with user-friendly procedures, licensing, and issue resolution.

  3. Export Promotion:

    • Offers schemes like EPCG, MEIS, SEIS, and DFIA, incentivizing businesses to export goods and services.

  4. Import Management:

    • Regulates imports by imposing restrictions, quotas, or special conditions when necessary.

  5. Certification Services:

    • Issues certificates to verify that Indian products are freely sold and manufactured for global markets.

  6. IEC Registration:

    • Simplifies global transactions and provides access to tax benefits, government schemes, and trade incentives.

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Why is DGFT Important?

The DGFT is a pivotal organization for businesses involved in international trade. It not only regulates India’s trade ecosystem but also ensures businesses can benefit from streamlined processes and government schemes, fostering an environment conducive to growth and global competitiveness.

ECGC

 

ECGC Ltd. (Formerly Export Credit Guarantee Corporation of India Ltd.), wholly owned by Government of India, was set up in 1957 with the objective of promoting exports from the country by providing Credit Risk Insurance and related services for exports. ECGC is essentially an export promotion organization, seeking to improve the competitiveness of the Indian exporters by providing them with credit insurance covers. ECGC keeps its premium rates at the optimal level.

What does ECGC do?

  • Provides a range of credit risk insurance covers to exporters against loss in export of goods and services

  • Offers Export Credit Insurance covers to banks and financial institutions to enable exporters to obtain better facilities from them

  • Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan

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How does ECGC help exporters?

ECGC Offers insurance protection to exporters against payment risks.

  • Provides guidance in export-related activities.

  • Makes available information on different countries with it’s own credit ratings.

  • Makes it easy to obtain export finance from banks/financial institutions.

  • Assists exporters in recovering bad debts.

  • Provides information on credit-worthiness of overseas buyers.

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Products & Services

Please visit ECGC website for details on products & services - https://main.ecgc.in/english/product-and-services/

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