exim bank presentation
TRANSCRIPT
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IMPLICATIONS OF FOREIGN TRADE POLICY AND
FACILITATION OF FOREIGN TRADE
A Presentation S.R.Rao
Chief General ManagerExport-Import Bank of India
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Exim India
WHERE DOES INDIA STAND GLOBALLY?
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 61.7China 438.3 393.6 1446.9 57.5Mexico 165.4 171.0 626.1 53.7Russia 135.9 75.4 433.5 48.7South Africa 38.7 35.0 160.1 46.0Argentina 29.4 13.1 129.7 32.8Brazil 73.1 48.3 492.1 24.7India 57.0 74.3 588.8 22.3Source: Economist Intelligence Unit
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India’s share in global merchandise exports: 0.8% (2003)
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Exim India
INDIA’S EXPORT PERFORMANCE
India's Export Performance (1999-2000 to 2003-04)
63623
47742
52856
439764414736760
29751
0
10000
20000
30000
40000
50000
60000
70000
1999-2000 2000-01 2001-02 2002-03 2003-04
Years
US$
mill
ion
All Commodities Agricultural & allied productsOres & minerals Manufactured goodsPetroleum & crude products
www.StudsPlanet.comSource: DGCIS, MOC&I
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Exim India
INDIA’S IMPORT PERFORMANCE
India's Import Performance (1999-2000 to 2003-04)
77237
566135158850056
61572
49799
37172
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
1999-2000 2000-01 2001-02 2002-03 2003-04
Years
US$
mill
ion
All Commodities Petroleum crude & products Non-POL items
www.StudsPlanet.comSource: DGCIS, MOC&I
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Exim IndiaTRADE POLICIES IN 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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Exim IndiaROLE OF INSTITUTIONS
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 Tradewww.StudsPlanet.com
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Exim IndiaEXIM BANK
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…”
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Exim India
FOREIGN TRADE POLICY 2004-09
Quantum Jump in Merchandise
Exports Required:
Enhance exports of major export
commodities
Identify potential export
commodities
Diversify export destinationswww.StudsPlanet.com
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Exim India
FOREIGN TRADE POLICY 2004-09
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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Exim IndiaLINES OF CREDIT 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
Commoditieswww.StudsPlanet.com
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
LOCs Extended by Exim Bank
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Exim India
FOREIGN TRADE POLICY 2004-09
Simplifying procedures and bringing down transaction costs
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.
For enhancing the growth of exports it is important to reduce the transaction costs involved.
Exim Bank Study on Transaction Costs of Indian Exports
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Exim India
FOREIGN TRADE POLICY 2004-09
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Sector No. of Firms
Transaction costs as % of export revenue (2003
Survey)
Transaction costs as % of
export revenue (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 machinery
3 5 -
Plastic components 2 5-10 -
Paper Industry 2 5-7 -
Others 7 1-2
Findings of Exim Bank’s Study
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Exim India
FOREIGN TRADE POLICY 2004-09
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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Exim India
FOREIGN TRADE POLICY 2004-09
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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Exim India
FOREIGN TRADE POLICY 2004-09
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
opportunitieswww.StudsPlanet.com
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Exim India
FOREIGN TRADE POLICY 2004-09
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”www.StudsPlanet.com
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Exim India
FOREIGN TRADE POLICY 2004-09
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)www.StudsPlanet.com
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
Exim Bank as a Consultant
Sharing Institutional Building Capabilities World wide
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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
Sharing Institutional Building Capabilities World wide
Exim Bank as a Consultant
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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
PROMOTING INDIAN CONSULTANCY
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Advisory Services
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 www.StudsPlanet.com
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Exim India
FOREIGN TRADE POLICY 2004-09
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 India
Software Training Institutes
Minor Ports
Technology Parks
EOU Projects & TUFS
EXIM BANK: FINANCING OF EXPORT-ORIENTED COMPANIES
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Term Loans
Project Finance
Equipment Finance
Working Capital
Overseas Investment Finance
Long Termupto 5 years
Term Loans for 1-2 years
Loans to Indian companies for Equity Investment in their ventures overseas
Loans to Indian companies to olden to their overseas ventures
Other Programmes
Export Marketing Finance
Export Product Development
Finance for R&D
Short Term < 1 year
Direct Equity stake
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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)
INSTITUTIONAL LINKAGES
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Exim India
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
Centro Estero Camere Commercio Piemontesi, Italy.
Netherlands Council for Trade Promotion.
Board of Investment of Mauritius
Institutional Linkages
Trade & Investment Promotion Agencies
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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.
Export-Import Bank of the Russian Federation.
Forum of Asian ECAs
Institutional Linkages
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Exim India
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
Centro Estero Camere Commercio Piemontesi, Italy.
Netherlands Council for Trade Promotion.
Board of Investment of Mauritius
Institutional Linkages
Trade & Investment Promotion Agencies
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Exim India
EXIM BANK : PARTNER IN GLOBALISATION
Technology
Capital (Foreign Investment)
Raw Materials
Capital Goods
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Final Products
Capital Goods
Capital(Overseas Ventures)
Product Development
Production
Marketing
Pre shipment
Post shipment
VALUE ADDITION
EXPORT
M
P
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M
P
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Exim India
FOREIGN TRADE POLICY 2004-09
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
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Exim India
FDI AND EXPORTS
Sector Share in FDI (%)
Transportation industry 7.50
Computer software industry 6.46
Chemicals & pharmaceuticals 5.70
Textiles 1.20
Leather & leather goods 0.20
Services (incl. Hotels & Tourism)
8.37
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Source: SIA, MOC&I
Low share of FDI in major export sectors