Export promotion is undertaken by both industrialized and developing economies. Export credit arrangements ensure protection from commercial risks, offer insurance mechanism from illiquidity and insolvency, and also provide cost-effective information. The need for export promotion is more important to transition economies as they may use the resources for modernization of infrastructure and technology. This paper attempts to assess the viability of the two institutions dedicated to export promotion in India.
The growing trend of exports among developing countries needs promotion, financing and insurance to sustain and realize their export potential through their respective export credit agencies. Firms need assistance in export counseling, marketing and managing their international trade. Almost all countries put in considerable efforts in maintaining their competitive edge in the sectors that receive recognition abroad. India is not only a major member of the BRIC countries but also a leader for several transition economies. The liberalization era has given rise to numerous labor intensive small and medium sized enterprises (SME) that look for export markets for their output. Many SMEs manufacture parts and components that become intermediate products for multinational firms (MNCs) in their production lines. These products may be consumed locally and also be exported. Thus, India’s focus is justifiably placed in export promotion through various government agencies and commercial banks. The Export Credit Guarantees Corporation of India (ECGC) and the Export Import Bank of India (EXIM Bank) are two institutions established by the government with the specific objective of export promotion.
India has a memorandum of understanding with the development banks of Brazil, Russia and China. India proposed the concept of an Asian Exim Banks Forum that has forged strong linkage among the members. The International Union of Credit and Investment Insurers (Berne Union) has supported new export business valued at $1.4 trillion in 2009 through its 44 member institutions. Its short term exposure is at $770 billion and the international investment insurance has $150 billion exposure. About 70 percent of Berne Union’s exposure is within the OECD countries.