Introduction – Understanding Export Credit in India
India’s export sector plays a vital role in strengthening the country’s economy and global presence. To make international trade smooth and sustainable, exporters often need financial assistance to manage pre-shipment and post-shipment expenses. Export credit serves this purpose — providing exporters with timely funds to meet production, shipping, and payment gap requirements.
In simple terms, export credit is a short- or medium-term loan offered to exporters by banks or financial institutions. It helps them fulfill international orders without facing liquidity issues. For many small and medium enterprises (SMEs) in India, this credit is the backbone that enables them to compete globally, meet delivery deadlines, and sustain business growth.
The Government of India, through the Export-Import Bank (EXIM Bank), Export Credit Guarantee Corporation (ECGC), and several commercial banks, has established structured mechanisms to ensure exporters have access to affordable financing solutions.
Types of Export Credit Available in India
Pre-shipment Export Credit
Pre-shipment credit, also known as packing credit, is granted to exporters before goods are shipped. It’s used to purchase raw materials, manufacture goods, and cover other production-related costs.
Post-shipment Export Credit
Post-shipment credit is offered after the goods have been shipped but before payment is received from the overseas buyer. It helps maintain liquidity until the buyer’s payment arrives.
Supplier’s and Buyer’s Credit
In supplier’s credit, the Indian exporter extends credit to the foreign buyer, while in buyer’s credit, the foreign buyer obtains funding from an overseas financial institution to pay the Indian exporter.
Export Credit Guarantee and Insurance
ECGC provides guarantees to banks and insurance coverage to exporters against risks like buyer insolvency, political instability, and payment default.
Eligibility Criteria for Export Credit in India
To qualify for export credit, exporters must meet certain basic conditions:
- Registered Business Entity: The applicant must have a valid Import-Export Code (IEC) issued by the DGFT.
- Exporter Type: Can be a manufacturer-exporter, merchant-exporter, or service exporter.
- Business Stability: A minimum operational history of one to two years is often required.
- Financial Soundness: Exporters must maintain good creditworthiness and provide necessary financial statements.
- Documentation: Standard KYC documents, shipping bills, purchase orders, and export contracts are essential.
Banks assess the exporter’s repayment capacity and compliance history before sanctioning credit.
Step-by-Step Process of Getting Export Credit in India
Step 1: Identify Export Financing Needs
Determine whether you need pre-shipment, post-shipment, or both types of credit based on your export cycle.
Step 2: Choose a Suitable Financial Institution
Compare banks and NBFCs offering export credit. Look for interest rates, repayment flexibility, and government-backed schemes.
Step 3: Prepare Documentation
Documents typically required:
- IEC Code
- PAN and GST Certificate
- Export Order or Letter of Credit
- Financial Statements and Bank Statements
- Collateral Documents (if applicable)
Step 4: Application and Appraisal
Submit your application along with all supporting documents. Banks assess creditworthiness and verify order authenticity before approval.
Step 5: Disbursement
Upon approval, funds are released either directly to suppliers or to the exporter’s account for use in production and shipping.
Major Banks and Financial Institutions Offering Export Credit
- Export-Import Bank of India (EXIM Bank): Provides a wide range of export financing and overseas investment support.
- State Bank of India (SBI): Offers packing credit, post-shipment finance, and foreign currency loans.
- ICICI Bank & HDFC Bank: Focus on customized export credit solutions for MSMEs.
- SIDBI: Targets small-scale exporters through concessional financing options.
Each bank follows RBI guidelines and often collaborates with ECGC for risk mitigation.
Role of the Export Credit Guarantee Corporation (ECGC) of India
The ECGC plays a crucial role in safeguarding Indian exporters from international payment risks. It provides:
- Credit Risk Insurance: Covers non-payment by foreign buyers.
- Export Credit Guarantees: Protects banks against losses due to exporter default.
- Overseas Investment Insurance: Supports companies investing abroad.
By reducing perceived risks, ECGC helps Indian exporters confidently expand into new markets.
Interest Rates and Repayment Terms for Export Credit
Interest rates vary depending on the borrower’s profile and credit scheme:
- Pre-shipment Credit: Typically 6–9% per annum.
- Post-shipment Credit: 7–10% per annum.
- Foreign Currency Loans: LIBOR-linked, offering lower effective rates.
Repayment periods usually range between 180 days to 1 year, extendable under special circumstances.
Government Schemes Supporting Export Credit
- Interest Equalization Scheme (IES): Offers interest rate subsidies to make export financing more affordable.
- EPCG Scheme: Allows import of capital goods at concessional duty for export production.
- Niryat Bandhu Scheme: Provides capacity-building and mentorship for new exporters.
- CLCSS: Offers capital subsidies for technological upgrades in export industries.
How to Improve Your Chances of Getting Export Credit Approval
- Maintain a strong CIBIL score and financial record.
- Demonstrate consistent export performance.
- Build relationships with recognized export councils.
- Ensure error-free documentation.
- Obtain ECGC coverage to enhance bank confidence.
Common Challenges in Obtaining Export Credit
- Excessive Paperwork and compliance norms.
- Collateral requirements for small exporters.
- Limited awareness of government schemes.
- Delayed loan disbursement due to procedural hurdles.
Fintech-driven credit platforms are helping simplify these challenges.
Digitalization of Export Credit in India
The government and RBI are modernizing trade finance through:
- Online loan portals (EXIM Bank, SIDBI, SBI, etc.)
- EDPMS – tracking real-time export transactions.
- Fintech collaborations for paperless loan approvals.
This digital shift ensures faster, transparent, and secure credit access.
Case Studies – Successful Exporters Using Export Credit
Case 1: MSME Textile Exporter from Surat
Used pre-shipment credit to fulfill large European orders, boosting revenue by 40%.
Case 2: IT Services Firm in Bengaluru
Leveraged post-shipment finance to manage delayed client payments and expand globally.
Impact of Export Credit on India’s Global Trade
Export credit has become a catalyst for:
- Enhancing India’s export competitiveness.
- Reducing financing gaps for MSMEs.
- Promoting economic diversification.
- Strengthening India’s position in global trade markets.
Future of Export Credit in India (2026 and Beyond)
With trade digitization, sustainable finance, and global collaborations, the future looks bright. The integration of AI-based credit scoring, blockchain trade finance, and green credit initiatives will revolutionize how Indian exporters secure funding.
FAQs – How to Get Export Credit in India for Global Trade
1. What is the minimum eligibility for export credit in India?
Any registered exporter with a valid IEC code and export order can apply.
2. Which bank offers the best export credit in India?
EXIM Bank and SBI are leading institutions offering competitive export credit solutions.
3. Is collateral mandatory?
Not always. Many schemes allow ECGC-backed loans without heavy collateral.
4. What’s the difference between pre-shipment and post-shipment credit?
Pre-shipment is for production; post-shipment is for managing payments after goods are shipped.
5. Can startups apply for export credit?
Yes, provided they have valid export orders and comply with bank requirements.
6. How long does approval take?
Generally, 7–15 working days with complete documentation.
Conclusion – Empowering Indian Exporters for the Global Stage
Export credit acts as a strategic enabler for Indian exporters, helping them overcome cash flow barriers, minimize risk, and compete globally. With the government’s proactive policies, financial inclusion efforts, and digital advancements, India is steadily emerging as a global export powerhouse.
By understanding the process and leveraging tools like ECGC, EXIM Bank, and fintech innovations, exporters can secure the financial edge they need to expand confidently across borders.
