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Implications of Foreign Trade Policy and Facilitation of Foreign Trade

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Institutions dedicated for promoting foreign trade have played an important role ... BURKINA FASO CAF covering BCIE covering. COTE D'IVOIRE BOLIVIA COSTA RICA ... – PowerPoint PPT presentation

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Title: Implications of Foreign Trade Policy and Facilitation of Foreign Trade


1
Implications of Foreign Trade Policy and
Facilitation of Foreign Trade
A Presentation S.R.Rao Chief General
Manager Export-Import Bank of India
2
Where Does India Stand Globally?
  • Indias share in global merchandise exports 0.8
    (2003)

3
Indias Export Performance
Source DGCIS, MOCI
4
Indias Import Performance
Source DGCIS, MOCI
5
Trade 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 Indias share in global merchandise
    trade by 2009

6
Role 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 Trade

7
Exim 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 countrys
    international trade

8
Foreign Trade Policy 2004-09
  • Quantum Jump in Merchandise Exports Required
  • Enhance exports of major export
  • commodities
  • Identify potential export commodities
  • Diversify export destinations

9
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 Africas Imports by 2007 from
    US 3.8 bn in 2003-04
  • US 4 bn in Chinas imports by 2007 (in 64
    identified groups) from US 0.86 bn in 2000
  • US 1.8 bn in LACs imports by 2007 (in 100
    identified groups) from US 0.6 bn in 2000
  • Share in Indias Exports in 2003-04 Africa
    (6) Latin America (1.8) China (4.7)

10
Lines 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
  • Commodities

11
LOCs Extended by Exim Bank
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 DIVOIRE
BOLIVIA COSTA RICA MALI
EADB covering COLOMBIA EL
SALVADOR NIGER KENYA

ECUADOR GUATEMALA SENEGAL TANZANIA

PERU HONDURAS TOGO
UGANDA VENEZUELA NICARAGUA
12
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

13
Foreign Trade Policy 2004-09
Findings of Exim Banks Study
14
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

15
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
  • Indias exports of Herbal products US 280 mn
    (2002-03)

16
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 Indias 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

17
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)
  • Indias 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

18
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 Indias share in global exports of
    services (1.4 in 2003)

19
Exim Bank as a Consultant
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

20
Exim Bank as a Consultant
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

21
Promoting Indian Consultancy
  • 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

22
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

23
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

24
Exim Bank Financing of Export-Oriented Companies
Term Loans
Project Finance
Equipment Finance
Working Capital
Overseas Investment Finance
Other Programmes
Export Marketing Finance
EOU Projects TUFS
Loans to Indian companies for Equity Investment
in their ventures overseas
Short Term lt 1 year
  • Software Training
  • Institutes
  • Minor Ports
  • Technology Parks

Term Loans for 1-2 years
Export Product Development
Loans to Indian companies to olden to their
overseas ventures
Long Term upto 5 years
Finance for RD
Direct Equity stake
25
Institutional Linkages
  • 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)

26
Institutional Linkages
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
  • Centro Estero Camere Commercio Piemontesi,
    Italy.
  • Netherlands Council for Trade Promotion.
  • Board of Investment of Mauritius

27
Institutional Linkages
  • 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

28
Institutional Linkages
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
  • Centro Estero Camere Commercio Piemontesi,
    Italy.
  • Netherlands Council for Trade Promotion.
  • Board of Investment of Mauritius

29
Exim Bank Partner in Globalisation
  • Technology
  • Capital (Foreign Investment)
  • Raw Materials
  • Capital Goods
  • Final Products
  • Capital Goods
  • Capital(Overseas Ventures)

EXPORT
M P O R
I
  • Product Development
  • Production
  • Marketing
  • Pre shipment
  • Post shipment

T
ADDITION
VALUE
30
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

31
FDI and Exports
Low share of FDI in major export sectors
Source SIA, MOCI
32
THANK YOU
www.eximbankindia.com
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