T.Y.

BBI
TOPIC:- FACILITIES TO EXPORTERS

NAME. 1. 2. 3. 4. 5. 6. SWATI G SHRADDHA K MEGHA M JYOTI M SOUNDARI N DIKSHITA P

ROLL NO. 14 18 23 24 28 52

GUIDED BY:- KANTHI MAM

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INDEX
SR. NO.
1.

TOPIC
CHAPTER 1: EXPORTERS 1.1 Introduction 1.2 Types Of Exporting 1.3 Types Of Facilities For Exporters 1.4 Advantages Of Exporting 1.5 Disadvantages Of Exporting CHAPTER 2: LETTER OF CREDIT 2.1 Introduction 2.2 Operation 2.3 Parties 2.4 Types 2.5 Bank Guarantees CHAPTER 3: PRE-SHIPMENT FINANCE 3.1 Introduction 3.2 Features 3.3 Procedure 3.4 Method 3.5 Importance CHAPTER 4: POST-SHIPMENT FINANCE 4.1 Introduction 4.2 Features 4.3 Procedure 4.4 Method 4.5 Importance Distinguish Between Pre-shipment and Postshipment Finance Conclusion Bibliogrraphy [2]

PAGE NO.

3-14

2.

15-24

3.

25-32

4.

33-39

5. 6. 7.

40 41 42

CHAPTER 1: EXPORTERS
1.1 INTRODUCTION
MEANING:
The facilities available to exporters are based on the basic principle that taxes and duties should not be exported. Different export promotion schemes such as Export Oriented Unit (EOU) Scheme. Export Promotion Capital Goods Scheme (EPCG), Advance Licence Scheme, Duty Entitlement Pass Book (DEPB) Scheme, Drawback Scheme and similar other schemes accordingly provide for concessional duty or exemption of duty on capital goods and/or exemption or refund or rebate of duties on raw materials and consumers. All imports required for authorised operations of a Special Economic Zone (SEZ) Unit are exempt from duties. The exporting industrial units outside SEZ are also eligible for similar exemption on raw materials and capital goods if they operate under EOU Scheme and on raw materials if under Advance Licence Scheme. The only additional facility on imports for SEZ unit is exemption for the material required for constructing the unit premises.

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DEFINITION:
A function of international trade whereby goods produced in one country are shipped to another country for future sale or trade. The sale of such goods adds to the producing nation's gross output. If used for trade, exports are exchanged for other products or services. Exports are one of the oldest forms of economic transfer, and occur on a large scale between nations that have fewer restrictions on trade, such as tariffs or subsidies.

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1.2 TYPES OF EXPORTING

A. DIRECT EXPORTING
Direct selling involves sales representatives, distributors, or retailers who are located outside the exporter's home country. Direct exports are goods and services that are sold to an independent party outside of the exporters home country. Mainly the companies are pushed by core competencies and improving their performance of value chain. 1. Direct selling through distributors: It is considered to be the most popular option to companies, to develop their own international marketing capability. This is achieved by charging personnel from the company to give them greater control over their operations. Direct selling also give the company greater control over the marketing function and the opportunity to earn more profits. In other cases where network of sales representative, the company can transfer them exclusive rights to sell in a particular geographic region.A distributor in a foreign country is a merchant who purchases the product from the manufacturer and sells them at profit. Distributors usually carry stock inventory and service the [5]

product, and in most cases distributes deals with retailers rather than end users. 2. Direct selling through foreign retailers and end users: Exporters can also sell directly to foreign retailers. Usually, products are limited to consumer lines; it can also sell to direct end users. A good way to generate such sales is by printing catalogs or attending trade shows.

3. Direct selling over the Internet: Electronic commerce is an important mean to small and big companies all over the world, to trade internationally. We already can see how important E-commerce is for marketing growth among exporters companies in emerging economies, in order to overcome capital and infrastructure barriers. E-commerce eased engagements, provided faster and cheaper delivery of information, generates quick feedback on new products, improves customer service, accesses a global audience, levels the field of companies, and support electronics data interchange with suppliers and customers.

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B. INDIRECT EXPORTING
Indirect exports, is simply selling goods to or through an independent domestic intermediary in their own home county. Then intermediaries export the products to customers foreign markets. Selling to or through an intermediary is a relatively cheap and straightforward way to enter a new market. Intermediaries are typically agents or distributors based in your target export market who sell your products or services to end users. A good intermediary will have in-market experience, reputation and contacts. Using them can be a quick way to get your products and services to the end user. They will generally require a level of support in the overseas marketing and selling of your product.

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1.3 TYPES OF FACILITIES FOR EXPORTERS

1. Rupee Export Credit (pre-shipment and post-shipment):
UCO provides both pre and post shipment credit to the Indian exporters through Rupee Denominated Loans as well as foreign currency loans in India. Credit facilities are sanctioned to exporters who satisfy credit exposure norms of UCO. Exporters having firm export orders or confirmed L/C from a bank are eligible to avail the export credit facilities. Rupee Export Credit is available generally for a period of 180 days from the date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI. The corporates may also book forward contracts with UCO in respect of future export credit drawls, if required, as per the guidelines/directives provided by RBI.

2. Pre-shipment Credit in Foreign Currency (PCFC):

UCO offers PCFC in the foreign currency to the exporters enabling them to fund their procurement, manufacturing/processing and packing requirements. These loans are available at very competitive international interest rates covering the cost of both domestic as well as import content of the exports. The corporates/exporters with a good track record can avail a running account facility with UCO [8]

for PCFC. PCFC is generally available for a period of 180 days from date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI.

3. Negotiation of Bills under L/C:

UCO's Authorised Forex Branches are active in negotiation/discounting of sight/usance international export bills under L/Cs opened by foreign banks as well as branches of Indian banks abroad. UCO offers the most competitive rates. These transactions are undertaken by our branches within the Bank/Country Exposure ceilings prescribed by UCO.

4. Export Bill Rediscounting:

UCO provides financing of export by way of discounting of export bills, as a post shipment finance to the exporters at competitive international rate of interest. This facility is available in four currencies i.e. US$, Pound Sterling, Euro and JPY.The export bills (both Sight and Usance) drawn in compliance of FEMA can be purchased/ discounted.Exporters can avail this facility from UCO to cover the bills drawn under L/C as well as other export bills.

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5. Bank Guarantees:
UCO, on behalf of exporter constituents, issues guarantees in favour of beneficiaries abroad. The guarantees may be Performance and Financial. For Indian exporters, guarantees are issued in compliance to RBI guidelines.

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1.4 ADVANTAGES OF EXPORTING

The reason for your company to consider exporting is quite compelling; the following are few of the major advantages of exporting:

Increased Sales and Profits:

Selling goods and services to a market the company never had before boost sales and increases revenues. Additional foreign sales over the long term, once export development costs have been covered, increase overall profitability.

Enhance Domestic Competitiveness:

Most companies become competitive in the domestic market before they venture in the international arena. Being competitive in the domestic market helps companies to acquire some strategies that can help them in the international area.

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 Gain Global Market Shares:

By going international companies will participate in the global market and gain a piece of their share from the huge international marketplace.

Diversification:
Selling to multiple markets allows companies to diversify their business and spread their risk. Companies will not be tied to the changes of the business cycle of domestic market or of one specific country.

Compensate for Seasonal Demands:

Companies whose products or services are only used at certain seasons domestically may be able to sell their products or services in foreign markets during different seasons.

Expand Life Cycle of Product:

Many products go through various cycles namely introduction, growth, maturity and declining stage that is the end of their usefulness in a specific market. Once the product reaches the final stage, maturity in a given market, the same product can be introduced in a different market where the product was never marketed before.

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1.5 DISADVATAGES OF EXPORTING

While the advantages of exporting by far outweigh the disadvantages, small and medium size enterprises especially face some challenges when venturing in the international marketplace.

Extra Costs:
Because it takes more time to develop extra markets, and the pay back periods are longer, the up-front costs for developing new promotional materials, allocating personnel to travel and other administrative costs associated to market the product can strain the meager financial resources of small size companies.

Product Modification:
When exporting, companies may need to modify their products to meet foreign country safety and security codes, and other import restrictions. At a minimum, modification is often necessary to satisfy the importing country's labeling or packaging requirements.

Financial Risk:
Collections of payments using the methods that are available (openaccount, prepayment, consignment, documentary collection and letter of credit) are not only more timeconsuming than for domestic sales, but also more complicated. Thus, companies must carefully weigh the financial risk involved in doing international transactions.

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 Export Licenses and Documentation:

Though the trend is toward less export licensing requirements, the fact that some companies have to obtain an export license to export their goods make them less competitive. In many instances, the documentation required to export is more involved than for domestic sales.

Market Information:
Finding information on foreign markets is unquestionably more difficult and time-consuming than finding information and analyzing domestic markets.In less developed countries, for example, reliable information on business practices, market characteristics, cultural barriers may be unavailable. Entering an export business requires careful planning, some capital, market know-how, access to quality product, competitive pricing strategy, management commitment and realizing the challenges and opportunities without them it is almost impossible to succeed in the export business. While there are no hard-and-fast rules that can help companies make decision to export and to become successful, understanding the advantages and disadvantages of exporting can help smooth entry into new markets, keep pace with competition and eventually realize profit.

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CHAPTER 2: LETTER OF CREDIT

2.1 INTRODUCTION
Letter of Credit is document issued by the importer bank in favour of the exporter giving him the authority to draw bills up to a particular amount covering a specified shipment of goods & assuring him of payment against the delivery of shipping documents. Bankers commercial letter of credit is known as documentary letter of credit because it envisages payment against exporters Bill provided they are accompanied by the shipping documents covering the goods contracted to be purchased by the importer. It is also described as commercial letter of credit because it is known in commercial transaction( i.e. sale & purchase of good). The operations of letters of credit have been regulated and are governed by the articles of uniform customs and practice for documentary credit of international chamber of commerce adopted by more than 165 countries. The uniform customs & practice (1993) revision (UCP 500) defines a letter of credit as documentary credit and stand by letter of credit means any arrangements, however named or described, whereby a bank acting at the request and on the instruction of the customer or its own behalf a) Is to make payments to or to the order of a third party (the beneficiary) or is to accept and pay bills of exchange (draft) draw by the beneficiary or b) Authorize another bank to effect such payments or to accept and pay such bill of exchange. c) Authorizes another bank to negotiate against stipulated document provided that the terms and conditions of the credit are complied with [15]

2.2 OPERATIONS UNDER LETTER OF CREDIT

The aspects of letter of credit and transaction can be easily understood from the following : Importer concludes a purchase contract for buying of certain goods with his overseas supplier who wants payments by letter of credit. The importer asks his bank to open a letter of crdit in favour of his overseas supplier After the request from the importer and considering the proposal in line with existing trade policy, his bank opens its letter of credit in favour of the overseas supplier (exporters). The negotiating bank receives credit from the opening bank and after satisfying itself about the authenticity of the credit, it forwards the same to the beneficiary for acceptance. After receiving the credit from the advising bank the exporter checks it thoroughly to ensure that it confirms to the terms of sale contract and if necessary, effect amendments to the credit and proceeds to effect the shipment of goods. The acceptance of the letter of credit is then communicated to the importer through his bank. After the shipment is effected the exporter prepares the document and draws his bill under better of credit for obtaining payments from the negotiation bank. After getting documents and the bill from the exporter, the negotiating bank checks them with the letter of credit terms and if in order, negotiates the bill up pay to the exporter. [16]

The opening bank (importer bank) receives the bill and documents from the negotiating bank (exporters bank) checks them and it found in order, confirms and reimburses to the negotiating bank. The opening bank presents the bill for payments to the opener (importer). The importer (opener) receives the bill, checks the document and if in order then accepts /pays the bill. On acceptance / payments, the importer gets the shipping documents covering the goods purchased by him.

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2.3 PARTIES LETTER OF CREDIT

1) Applicant /Importer :Importer is the opener on whose behalf or account the letter issued by his bank.

2) Applicants /Importers bank :The bank who issues or opens the letter of credit on behalf of the importer /customer.

3) Exporter :Exporter is the Beneficiary of the letter of credit who is entitled to receive the payments of his bills according to the terms of letter of credit.

4) Intermediary / Confirming bank:Intermediary bank usually a branch or the correspondent of the opening bank in the exporting bank in the exporting country through which the credit is advised to the exporter. If it merely forwards the credit, without any obligation on its part, it is called the advising or notifying bank. If

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the beneficiary bank adds its own understanding to the beneficiary, it becomes the confirming bank.

5) Paying/ bank:-

Negotiating

The bank, which negotiates the beneficiary bills under the credit and pay for it is known as paying/negotiating bank.

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2.4 TYPES OF LETTER OF CREDIT

Basically, the letter of credit is either (a) revocable or irrevocable, all credit, therefore, should clearly indicate whether they are revocable or irrevocable. In the absence of such indication , the credit shall be deemed to be irrevocable.Following are the various types of letter of credit:

1) Revocable and Irrevocable letter of credit :

A Revocable L/C is one the term of which can be altered/ amended without the consent of the beneficiary. An Irrevocable L/C is one whose terms cannot be changed without the consent of all the parties to the L/C . an Irrevocable L/C is therefore the safest guarantee of payment that a creditor can have

2) Confirmed and letter of credit :-

unconfirmed

A L/C in which confirmation is added by an other bank, it is known as confirmed L/C. In case of unconfirmed L/C there is no confirmation.

3) Clean letter of credit and documentary letter of credit :A clean L/C is one under which no documents of title accompanies the bill. In case of documentary credit the L/C is accompanied by the list of documents.

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4) Sight letter of credit & usance letter of credit :A sight L/C is one where the draft drawn under the L/C are on sight or payment basis i.e. where the documents of title to goods will be handed over to the importer on receipt of payment by the L/C opening bank. Usance L/C is one in which the draft grant a period /usance for payments say 30/60/90 days from acceptance. In such cases, the documents will be handed over to the importer by the opening bank on acceptance of draft.

5) Fixed credit or revolving credit :In case of fixed credit it is open for a stated amount and the credit in a becomes completely exhausted as soon as bill agreegating to the amount of the credit is one which enables the seller to export the goods and the credit becomes continues. Buyer need not have time and again open L/C each time.

6) Red clause L/C and green clause L/C :A red clause is one with a clause printed in red and enables the correspondent bank in the exporters country to grant advances to the beneficiary. The issuing bank accepts responsibility for such advances. Green clause is one, which authorizes the warehouses charges as advance to be given.

7) Transferable Letter of Credit:It is credit , which can be transferred another. For eg. A buyer may open in favour of the exporter or middleman. The beneficiary [21]

has the advantage of transferring the credit to same other person from whom he will be procuring the goods for onward export. The term of transferred L/C are same as the parent or original L/C.

8) Back to back letter of credit :This is a credit opened on the basis of another L/C. The difference between the transferable L/C an back to back is that whereas in back to back, a second credit is opened on the strength of the first L/C. In the case of transferable L/C the benefit of the credit transferred to the seller of the good.

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2.5 BANK GUARANTEES

At the request of the customer the bank issues guarantees favoring the beneficiaries. Thus, the contract of a guarantee is a tri-partite contract. The customer is the person at whose request the guarantee is issued, the bank is the guarantor and the payee/ beneficiary i.e. the person in whose favor the guarantee is issued the bank charges commission for issue of guarantee, which is an income for the bank. The guarantee is non-fund based facility as the liability on the bank may or may not crystallize on the due date based on the failure to perform the contract by the borrower. Therefore they are shown as contingent liability by way of footnote to accounts. The guarantees are of two types they are as follows:

A. Performance guarantees: Performance guarantees normally guarantees the performance of the contract. For e.g. the borrower getting a contract for construction of a bridge against which the BMC may insist on issue of guarantee towards the performance of the contract from the borrower.

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B. Financial guarantees: Financial guarantees represent the guarantees for ensuring the financial obligations. For e.g. BEST may float a tender for supply of BUS from interested contractors and may insist on 10% tender money/ earnest money to be deposited along with the quotations. This is to be invited only capable and serious bidders. In case, the bidders are who are awarded the contracts do not accepts the same, the bid money will be forfeited. Through the credit facility at the same stage of issue of guarantee is a non fund based facility, the bank has to be careful in assessing the credit facility. Borrowers standing, financial position, business record etc. to lending a fund based facility. Hence, many times the bank insists on cash margin ranging from 5% to 100% depending upon the customer.

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CHAPTER 3: PRE-SHIPMENT FINANCE

3.1 INTRODUCTION

Pre-shipment Credit in Foreign Currency (PCFC): UCO offers PCFC in the foreign currency to the exporters enabling them to fund their procurement, manufacturing/processing and packing requirements. These loans are available at very competitive international interest rates covering the cost of both domestic as well as import content of the exports. The corporate/exporters with a good track record can avail a running account facility with UCO for PCFC. PCFC is generally available for a period of 180 days from date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI.

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3.2 FEATURES
1) Eligibility: Pre-shipment finance can be granted only to those exporters who produce a confirmed export order and/ or a letter of credit received against the export contract. Indirect exporter who exports through export houses and others can also obtained packing credit provided. He produces a letter from concerned export housed or other concerned party stating that a portion of the export order has been allotted in his favour. The export house or other concerned party should also state that they do not wish to obtain packing credit for the same. 2) Purpose: The Pre-shipment finance is required by the exporter to meet working capital requirement before shipment of goods such as payment for raw materials, payment of wages, etc. 3) Documentary security: The Pre-shipment finance can be granted against the following confirmed export order letter of credit received against the contract.

4) Forms/ methods shipment finance:

of

Pre-

Cash packing credit loans Against hypothecation Against pledge etc.

5) Amount of packing credit:

The amount of packing credit depends on the amount of exports order and credit rating of the exporter by the bank. The bank may also consider the export incentives receivables such as DBK. [26]

6) Period of packing credit:

It is normally granted for a period of 180 days. Further extension of 90 days can be provided without the prior permission of RBI. Therefore, permission is required to be obtained from RBI. 7) Rate of interest: Packing of credit is provided at a concessional rate of interest. The difference in normal rate of interest and exports finance rate of interest is reimbursed by RBI to banks.

8) Loan agreement: Before disbursement of loans, the banks require the exporter to execute a formal loan agreement.

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3.3 PROCEDURE OF PRE-SHIPMENT

1. Application to bank: The exporter should apply in a prescribed form to his bankers giving detail of the credit requirements. The application of packing of credit should be accompanied by the following documents: An undertaking stating that the advances will be utilized for the specific purpose in respect of export of goods. An undertaking stating that the shipment will be effected within a certain time limit and submit the relevant shipping documents to the bank in time. In case the exporter wants to obtain the credit against preliminary information of contract, whereby at later stage the export order or letter of credit will be received by him, an undertaking to the effect that the same will be produced to the bank within reasonable time. In case of manufacturer, who exports through export house/ Merchant exporter, an undertaking from the merchant exporter stating that they have not/ will not avail of packing of credit against the same transaction and for the same purpose till the original credit is liquidated. Agreement of hypothecation or letter of pledge. Demand promote signed on behalf of the company. Letter of community signed on behalf of the company. Certificate of board resolution. Letter of authority to operate the account. Confirmed export order/ or LC in original. Appropriate policy/ guarantee of ECGC Copy of valid RCMC (Registration-cum-membership Certificate). 2. Processing of application: The application is processed taking into consideration the following: Documentary evidence in the form of export order/ LC or correspondence exchanged between the applicant and the importer. Credit worthiness of the applicant. [28]

3. Sanctioning of loans: If the application is found in order the bank sanctions the amount. Normally the loan is sanctions depending upon FOB value of exporter order/ LC or market value of the goods whichever is less. 4. Loan agreement: Before disbursement of loan, the bank requires the exporter to execute a formal loan agreement. The loan agreement contains terms and conditions relating to the loan. 5. Disbursement of loan: Normally, packing credit advances are not sanctioned in lumpsum but are disbursed in a phased manner. 6. Maintenance of accounts: As per RBI directives, banks must maintain separate a/c in respect of each pre-shipment advance. However, running a/c are permitted in case of units in EPZ/SEZ and 100% EOUS. 7. Monitoring of accounts: The bank advancing packing credit should monitor the use of packing credit by the exporter i.e. whether the account is used for export purpose or not. 8. Repayment: As soon as the export proceeds and / or incentives are received, the exporter should repay the amount to the bank advancing credit. Normally, the advancing bank realizes the export proceeds and the makes necessary entries in the exporters.

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3.4 METHODS OF PRE-SHIPMENT:

1. Advance against hypothecation: Packing credit is given to process the goods for export. The advance is given against and the security remains in possession of the exporter. The exporter is required to execute the hypothecation deed in favor of the bank. 2. Advance against pledge: The bank provides packing credit against security. The security remains in the possession of the bank on collection of export proceeds; the bank makes necessary entries in the packing credit account of the exporter. 3. Advances

against exports through exports house:

Manufacturer, who exports through export houses or other agencies can obtain packing credit, provided such manufacturer submits an undertaking from the exporters houses that they have not or will not avail of packing credit against the same transaction.

4. Advances against back-to-back letter of credit: The merchant exporter who is in possession of the original letter of credit may request his bankers to issue back-to-back LC against the security of original LC in the favor of the sub-supplier. The sub-supplier, thus, gets the back to back LC on the basis of which he can obtain packing of credit.

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5. Advance

against red

Letter of credit:
The red letter of credit received from a imported authorizes the local bank to grant advances to the exporter to meet working capital requirements relating to processing of goods for exports. The issuing bank stands as a guarantor for packing of credit.

6. Advances against duty draw back (DBK): DBK means refund of custom duties paid on the import of raw materials, component parts and packing material used in the export production. It also includes refund of central excise duties paid on indigenous materials. Banks offer pre-shipment as well as post-shipment advances against claims for DBK.

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3.5 IMPORTANCE OF FINANCE AT PRESHIPMENT STAGE:

To purchase raw materials, and other inputs to manufacture goods. To assemble the goods in the case of merchant exporters. To store the goods in suitable warehousing till the goods are shipped. To pay for packing, marking and labeling of goods. To pay for pre-shipment inspection charges. To import or purchase form the domestic market heavy machinery and other capital goods to produce export goods. Meet the expenses of processing of goods.

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CHAPTER 4: POST- SHIPMENT FINANCE

4.1 INTRODUCTION

Post-shipment finance is a loan or advance granted by a bank to an exporter of goods from India. This facility is available to an exporter subsequent to the date of shipment of goods up to the date to realization of export proceeds.

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4.2 FEATURES OF POST-SHIPMENT:

1. Eligibility: It is extended to the expenses who has export documents in his name, attested by the customers. 2. Purpose: Post shipment finance provides working capital to the exporter from the date of shipment to the date for realization for export proceeds. 3. Documentary evidence: It is extended against the evidence of shipping documents indicating the actual shipment of goods. 4. Form of post-shipment: Postshipment may be provided in one of the following forms: Exports bills negotiated under LC. Advance against DBK. Advances against bills under collections, etc. 5. Amount post-shipment credit: The amount of post-shipment finance is generally provided for its full value of shipment. 6. Period of post-shipment finance: The short term period is usually 90 days. The loan provide by commercial banks. Additional 90 days may be provided from date of negotiable till date of payment.

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7. Rate of interest: Post-shipment finance facility is granted at a concessional rate of interest, as compared to the rate of interest changed for domestic or local parties.

8. Loan agreement: Before disbursement of loan, the bank requires the exporter of execute a formal loan agreement.

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4.3 PROCEDURE OF POST-SHIPMENT

1. Application: The application must be supported by relevant shipping documents and such other documents/ undertaking as required by the bank. The other documents may include: Demand promote signed on behalf of the company/ firm. Letter of continuity signed on behalf of the company/ firm. Certificate of the board of directors resolution. Letter of authority to operates the account. 2. Processing of application: The application is processed after verification of shipping documents. The bank also takes into consideration the credit worthiness of the exporter and the importer and also the characteristics of the product exported. 3. Loan agreement: Before disbursement of loan, the banks require the exporter to execute a formal loan agreement. 4. Maintenance of accounts: As per RBI directives, banks must maintain separate account in respect of each post shipment advance. However, running accounts are permitted in case of units in EPZ/ SEZ and 100% EOUs. 5. Repayment: As soon as the export proceeds and incentives are received the exporter should repay the amount to the bank advancing credit. Normally, the advancing bank realizes the export proceeds and the makes necessary entries in the exporter account.

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4.4 TYPES OF POST-SHIPMENT FINANCE:

1. Export bills negotiated under L/C:
The exporter can claims post-shipment finance by drawing bills and drafts under L/C. the bank insist on the necessary documents as stand in the L/C. if all documents are in order, the bank negotiates the bill and advances is granted to the exporter.

2. Purchase of exports bills drawn under confirmed contracts:

The banks may sanction advance against purchase discount of exports bills drawn under confirmed contracts. If the LC is not available as security, the bank is totally dependent upon the credit worthiness of the exporter.

3. Advances against bills of collection:

In this case, the advance is granted against bills dawn under confirmed export order/ LC and which sent for collection. They are not purchased or discounted by the bank. However, this form is not as popular as compared to advance against purchase or discounting of bills.

4. Advance against goods sent on consignment basis:

The bank may grant post-shipment finance against goods sent on consignment basis.

5. Advance against undrawn balance of bills:

There are cases where bills are not drawn for full invoice value of goods. Certain amount is undrawn balance which is due for payment after adjustments due to difference in rates, weight, quality etc. banks offer [37]

advance against such undrawn balances subject to a maximum of 5% of the value of export and an undertaking is obtained to surrender balance proceeds to the banks.

6. Advances against draw back (DBK):

duty

DBK means refund of custom duties paid on the import raw materials, components parts and packing materials used in the export production. It also includes refund of central excise duties paid on indigenous as well postshipment advances against claims for DBK.

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4.5 IMPORTANCE OF POST-SHIPMENT

To pay to agents/ distributors and other for their services. To pay for publicity and advertising in the overseas markets. To pay for port authorities, customs and shipping agents changes. To pay towards export duty or tax, if any. To pay towards ECGC (Export Credit Guarantee Corporation of India Ltd) premium. To pay for freight and other shipping expenses. To pay towards various expenses in connection with visits aboard for market surveys or for some other purpose. To pay towards marine insurance premium, under CIF contract. To meet expenses in respect of after sale-service. To pay towards such expenses regarding participation in exhibition and trade fairs in India and Abroad. To pay for representatives abroad in connection with their stay abroad. To pay for any other in connection with export of goods.

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DISTINGUISH BETWEEN PRE-SHIPMENT AND POST- SHIPMENT PRE-SHIPMENT FINANCE POST-SHIPMENT FINANCE
1) Meaning
Financial assistance extended to the exporter prior to shipment of goods. It is provided after the actual shipment of goods from India.

2) Beneficiary
It is offered to Indian export/ or suppliers It is offered to Indian parties as well as of export goods. to overseas buyer, and agencies.

3) Purpose
It is required to meet working capital before shipment of goods for exports. It is required to meet working capital need after shipment of goods.

4) Documentary evidence
Pre-shipment finance is provided against the documentary evidence of export order/ letter of credit. It is provided against the documentary evidence of shipping documents (attested by customs)

5) Form of finance
It can be granted against duty drawback, It can be granted against purchase of letter of hypothecation, red L/C, back-to- bills deferred exports, deemed exports back L/C, etc. etc.

6) Amount
The amount of finance depends upon the export order and credit rating by the bank. The amount of finance depends upon the type and value of goods exported

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CONCLUSION
The Indian exporters are now increasingly realising the need for greater technological assistance and information for their competitive export production facilities. Greater interaction with R&D and other institutions is needed. There is huge potential for export of technologies for manufacture of bulk drugs to South East Asia, Middle East and African countries. Initially starting from products, it can also lead to export of intermediates, export of machinery, design & engineering, etc. in the later stages.WTO compatible preferential treatment as given to producers in some of the importing countries may be considered by India also.Awareness programmes about the policies and facilities available to exporters, as well as about the available assistance and funding for technology development etc. need to be organised in different parts of the country.

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BIBLIOGRAPHY

BOOOKS:
International banking finance T.Y.BBI Vipul Prakashan and

WEBSITE:
www.google.com www.scribd.com www.eximguru.com

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