Export Promotion

1. EXPORT PROMOTION
Sunil Kr Ahirwar
BBA-IB
Enrollment No- A1833312026
Amity International Business School
2012-2015

2. Concept
• Export development is important to the firm and to the
economy as a whole.
• Export promotion is designed to help firms enter and
maintain their position in international markets and to
match or counteract similar efforts by other nations.

3. How export promotions ?
• Various approaches toward export promotion include:
• Knowledge transfer
• Direct or indirect subsidization of export activities
• Reducing governmental red tape for exporters.
• Export financing and mixed aid credits to exporters
• Altered tax legislation for nationals living abroad.
• Tax benefits to export oriented units.
• Exports Promotion Zones.
• Establishing special institutes for export promotions.

4. How export promotions ?
Export Promotion for MSME:
The capability of Indian MSME products to compete in
international markets is reflected in its share of about
40% in national exports.
In case of items like
 Readymade garments
 Leather goods
 Processed foods
 Engineering items, the performance has been
commendable both in terms of value and their share.

5. Export Promotion Programs
• MARKETING ASSISTANCE AND EXPORT PROMOTION SCHEME
Plan Scheme ‘Training and Manpower Development' consists
of the following Components :-
• Participation in the International Exhibitions/ Fairs.
• Training Programmes on Packaging for Exports
• Marketing Development Assistance Scheme for MSME
exporters (MSME-MDA)
• National Award for Quality Products.

6. What is ECGC?
• Export Credit Guarantee Corporation of India Limited, was
established in the year 1957 by the Government of India
to strengthen the export promotion drive by covering
the risk of exporting on credit.
• it functions under the administrative control of the Ministry
of Commerce & Industry, Department of Commerce,
Government of India.
• It is managed by a Board of Directors comprising
representatives of the Government, Reserve Bank of
India, banking, insurance and exporting community.

7. What does ECGC do?
• Provides a range of credit risk insurance covers to
exporters against loss in export of goods and services
• Offers guarantees 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

8. How does ECGC help exporters?
• Offers insurance protection to exporters against
payment risks
• Provides guidance in export-related activities
• Makes available information on different countries
with its 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

9. Need for export credit insurance
• Payments for exports are open to risks even at the
best of times.
• The risks have assumed large proportions today
due to the far-reaching political and economic
changes that are sweeping the world.
• An outbreak of war or civil war may block or delay
payment for goods exported.
• Economic difficulties or balance of payment
problems may lead a country to impose restrictions
on either import of certain goods or on transfer of
payments for goods imported

10. Need for export credit insurance
• In addition, the exporters have to face commercial
risks of insolvency or protracted default of buyers.
• The commercial risks of a foreign buyer going
bankrupt or losing his capacity to pay are
aggravated due to the political and economic
uncertainties.
• Export credit insurance is designed to protect
exporters from the consequences of the payment
risks, both political and commercial, and to enable
them to expand their overseas business without fear
of loss.

11. Products and services
 SCR or Standard Policy
 Shipments (Comprehensive Risks) Policy, commonly
known as the Standard Policy, is the one ideally suited to
cover risks in respect of goods exported on short-term
credit, i.e. credit not exceeding 180 days. This policy
covers both commercial and political risks from the date
of shipment.
 It is issued to exporters whose anticipated export
turnover for the next 12 months is more than Rs.50 lacs.
(The appropriate policy for exporters with an anticipated
turnover of Rs.50 lacs or less is the Small Exporter's
Policy, described separately).

12. What are the risks covered under the Standard
Policy?
a. Commercial Risks
 Insolvency of the buyer.
 Failure of the buyer to make the payment due within a
specified period, normally four months from the due date.
 Buyer's failure to accept the goods, subject to certain
conditions.
b. Political Risks
 Imposition of restriction by the Government of the buyer's
country or any Government action, which may block or delay
the transfer of payment made by the buyer.
 War, civil war, revolution or civil disturbances in the buyer's
country. New import restrictions or cancellation of a valid
import license in the buyer's country.
 Interruption or diversion of way outside India resulting in
payment of additional freight or insurance charges which can
not be recovered from the buyer.

13. Small Exporters Policy
• The Small Exporter's Policy is basically the
Standard Policy, incorporating certain improvements
in terms of cover, in order to encourage small
exporters to obtain and operate the policy.
• It is issued to exporters whose anticipated export
turnover for the period of one year does not exceed
Rs.50 lacs.

14. In what respects is the Small Exporter's Policy
different from the Standard Policy?
• Period of Policy: Small Exporter's Policy is issued for a
period of 12 months, as against 24 months in the case of
Standard Policy.
• Declaration of shipments: Shipments need to be
declared quarterly (instead of monthly as in the case of
Standard Policy).
• Declaration of overdue payments: Small exporters are
required to submit monthly declarations of all payments
remaining overdue by more than 60 days from the due
date, as against 30 days in the case of exporters holding
the Standard Policy

15. • Percentage of cover: For shipments covered under
the Small Exporter's Policy ECGC will pay claims to
the extent of 95% where the loss is due to
commercial risks and 100% if the loss is caused by
any of the political risks (Under the Standard Policy,
the extent of cover is 90% for both commercial and
political risks).
• Waiting period for claims: The normal waiting
period of 4 months under the Standard Policy has
been halved in the case of claims arising under the
Small Exporter's Policy.

16. • Specific Shipment Policy - Short Term(SSP-ST)
• Export Turnover Policy
• Buyer Exposure Policies
• Construction Works Policy:
Construction Works Policy is designed to provide cover to
an Indian contractor who executes a civil construction job
abroad.

17.  ECIB to Banks
Export Finance (Overseas Lending) Guarantee
If a bank financing an overseas project provides a
foreign currency loan to the contractor, it can
protect itself from the risk of non-payment by the
contractor by obtaining Export Finance (Overseas
Lending) Guarantee.
 What are the premium rates applicable?
The premium rate is 0.90% per annum for 75% cover
and 1.08% per annum for 90% cover. Premium is
payable in Indian Rupees. Claims under the
Guarantee will also be paid in Indian Rupees.

18. Special Schemes
Transfer Guarantee
 When a bank in India adds its confirmation to a foreign Letter of Credit,
it binds itself to honour the drafts drawn by the beneficiary of the Letter
of Credit without any recourse to him provided such drafts are drawn
strictly in accordance with the terms of the Letter of Credit.
 The confirming bank will suffer a loss if the foreign bank fails to
reimburse it with the amount paid to the exporter. This may happen due
to the insolvency or default of the opening bank or due to certain
political risks such as war, transfer delays, which may delay or prevent
the transfer of funds to the bank in India. The Transfer Guarantee seeks
to safeguard banks in India against losses arising out of such risks.
 Transfer Guarantee is issued, at the option of the bank to cover either
political risks alone, or both political and commercial risks. Loss due to
political risks is covered upto 90% and loss due to commercial risks
upto 75%.
 What are the applicable premium rates?
 The premium rates depend on the country of export and the tenor of
L/C.

19. Special Schemes
Overseas Investment Guarantee
 ECGC has evolved a scheme to provide protection for Indian
Investments abroad. Any investment made by way of equity
capital for the purpose of setting up or expansion of overseas
projects will be eligible for cover under investment insurance.
The investment may be either in cash or in the form of export
of Indian capital goods and services.
 The cover would be available for the original investment
together with annual dividends or interest receivable.
 The risks of war, restriction on remittances are covered under
the scheme. As the investor would be having a hand in the
management of the joint venture, no cover for commercial
risks would be provided under the scheme.

20. Export promotion councils
• There are a no. of export promotion councils under the
administrative control of Ministry of commerce.
• These councils are registered as non profit organisations
under the co. act.
• The councils perform both advisory and executive
functions.
• Production , development, and export.

21. Export Promotion Councils under
Department of Commerce
 ENGINEERING EXPORT PROMOTION COUNCIL:
Way back in 1955-56, the nascent Indian
engineering sector was in the process of diversifying
and restructuring the narrow export base of the industry
and it needed a strong push - the EEPC INDIA
(Formerly Engineering Export Promotion Council)
was set up in 1955 under the sponsorship of Ministry of
Commerce, Govt. of India, for export promotion of
engineering goods, projects and services from India.
Initially started with a few hundreds of
engineering units as a small outfit, with a passage of
time it has grown to be the largest Export Promotion
Council having membership of nearly 12,000 from
amongst large Corporate Houses, Star Trading Houses,
Small & Medium Scale Units (SME), Trading Houses,
etc. Out of the total membership of the Council, 60%
constitutes the SMEs.

22. Export Promotion Councils under
Department of Commerce
 CHEMICALS & ALLIED PRODUCTS EXPORT
PROMOTION COUNCIL
 COUNCIL FOR LEATHER EXPORTS
 SPORTS GOODS EXPORT PROMOTION COUNCIL
 GEM & JEWELLERY EXPORT PROMOTION
COUNCIL
 CASHEW EXPORT PROMOTION COUNCIL
 PLASTICS EXPORT PROMOTION COUNCIL
 Export Promotion Council for EOUs & SEZ Units

23. Export Promotion Councils under
Ministry of Textiles
• APPAREL EXPORT PROMOTION COUNCIL
• CARPET EXPORT PROMOTION COUNCIL
• COTTON TEXTILE EXPORT PROMOTION COUNCIL
• EXPORT PROMOTION COUNCIL FOR HANDICRAFTS
• HANDLOOM EXPORT PROMOTION COUNCIL
• SYNTHETIC & RAYON TEXTILE EXPORT PROMOTION
COUNCIL
• WOOL & WOOLENS EXPORT PROMOTION COUNCIL

24. Thank You
• Sunil Kr Ahirwar
• BBA-IB
• Amity International Business School
• Mo: 09871836819
• Email: neal_404@rediffmail.com