Export-Import Bank of India (EximBank India) has received the equivalent of around US$225 million of additional state funding to help support Indian exports.

This is the second state top up in two years for the bank after the government said last year it would provide additional funding of US$195 million some of which may support foreign importers who will be able to tap the additional funding by opening letters of credit (L/Cs) to purchase Indian goods and services eligible for export under India's foreign trade policy.

More state funding

In 2019 the Indian government doubled its authorised capital in Eximbank India from the equivalent of US$1.5 billion to US$3 billion.

Now it seems that the government is prepared to put up additional funding on an annual basis to help support overseas sales of Indian goods and services, particularly in areas where Indian businesses are competitive such as the textile and infrastructure sectors.

L/C supportAdditional L/Cs are expected to be opened by importers of Indian goods and services for projects targeted by Eximbank India such as infrastructure construction contracts secured by an Indian contractor.

Typically, Indian sellers applying for these L/Cs must supply at least 75 per cent of the value of goods and services bought using the facility while the remaining 25 per cent may be procured from outside India.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.