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    Kavita Maam

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    Harshil Doshi
    - Export finance refers to financial assistance provided by banks and institutions to companies for carrying out business abroad. It helps local companies expand globally. - There are two main types of export finance: pre-shipment finance which provides loans before goods are shipped, and post-shipment finance which provides loans after shipment until payment is received. - Import finance is used to raise capital for importing goods and services from other countries as it helps address delays and complications of international trade. Common types include letters of credit, cash in advance, and open accounts.

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    Kavita Maam

    Uploaded by

    Harshil Doshi
    99 views22 pages
    - Export finance refers to financial assistance provided by banks and institutions to companies for carrying out business abroad. It helps local companies expand globally. - There are two main types of export finance: pre-shipment finance which provides loans before goods are shipped, and post-shipment finance which provides loans after shipment until payment is received. - Import finance is used to raise capital for importing goods and services from other countries as it helps address delays and complications of international trade. Common types include letters of credit, cash in advance, and open accounts.

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    - Export finance refers to financial assistance provided by banks and institutions to companies for carrying out business abroad. It helps local companies expand globally. - There are two main types of export finance: pre-shipment finance which provides loans before goods are shipped, and post-shipment finance which provides loans after shipment until payment is received. - Import finance is used to raise capital for importing goods and services from other countries as it helps address delays and complications of international trade. Common types include letters of credit, cash in advance, and open accounts.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    99 views22 pages

    Kavita Maam

    Uploaded by

    Harshil Doshi
    - Export finance refers to financial assistance provided by banks and institutions to companies for carrying out business abroad. It helps local companies expand globally. - There are two main types of export finance: pre-shipment finance which provides loans before goods are shipped, and post-shipment finance which provides loans after shipment until payment is received. - Import finance is used to raise capital for importing goods and services from other countries as it helps address delays and complications of international trade. Common types include letters of credit, cash in advance, and open accounts.

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    EXPORT IMPORT FINANCE

    EXPORT FINANCE:-
    MEANING:-
    • Export finance refers to a financial assistance extended by banks and
    other financial institutions to business for carrying out business
    abroad.
    • It is for local companies to expand it into global audience.
    • Loans and advances are extended to exporters for purchasing.
    TYPES OF EXPORT FINANCE:-
    • PRE-SHIPMENT FINANCE:-
    Loans and advances which are granted by the financial institutions
    for financing the purchase of goods prior to shipment is called as pre-
    shipment credit.
    Types of pre-shipment:-
    a. Cash packing credit loan.
    b. Advance against hypothecation
    c. Advance against pledge.
    d. Advance against red l/c.
    • Post shipment finance:-
    Loans or advances are granted by financial institutions to the
    date of extending credit after shipment of goods to the date of
    realisation of exports proceeds is known as post shipment finance.
    TYPES OF POST SHIPMENT FINANCE:-
    a. Export bills negotiated under L/C.
    b. Advance against bills under collection.
    c. Advance against claims of duty drawbacks.
    d. Advance against goods sent on consignment basis.
    IMPORT FINANCE:-
    MEANING:-
    • Import means goods or service brought into one country from
    another.
    • The delays and complications associated with trading overseas can
    be a huge burden on cash inflows.
    • Import finance are used to raise high capital in different products.
    TYPES OF IMPORT FINANCE:-
    • CONSIGNMENT PURCHASE
    • CASH IN ADVANCE
    • LETTER OF CREDIT
    • DOWN PAYMENT
    • OPEN ACCOUNT
    • DOCUMENTARY COLLECTIONS
    Letter Of Credit
    A letter of credit is a letter from a bank guaranteeing that a buyer's
    payment to a seller will be received on time and for the correct
    amount. In the event that the buyer is unable to make payment on the
    purchase, the bank will be required to cover the full or remaining
    amount of the purchase.
    Letter Of Credit Process
    Types Of Letter Of Credit
    • Revocable LC.
    • Irrevocable LC.
    • Confirmed LC.
    • Unconfirmed LC.
    • Transferable LC.
    • Un-transferable LC.
    • Deferred LC.
    • LC at Sight.
    • Red Clause LC.
    • Back to Back LC.
    INTERNATIONAL TRADE ENVIRONMENT
    International trade is the exchange of capital, goods, and services
    across international borders or territories. In most countries, such trade
    represents a significant share of gross domestic product (GDP).
    FACTORS GOVERNING INTERNATIONAL TRADE
    ENVIRONMENT ARE :
    • Economic factors
    • Social and culture factors
    • Legal and political factors
    • Technology factors
    RBI:
    • Monetary Authority
    • Issuer of Currency
    • Banker to Bank
    • Manager of Foreign Exchange
    • Regulator and Supervisor of the financial system
    CUSTOMS:
    • Custom assess and collect revenue
    • Customs protects the country and society
    • Customs meet the needs of both international trades and customs
    authority
    • It also helps in protecting the domestic Industry
    Export Credit Guarantee Corporation of
    India(ECGC).
    • ECGC was established in the year 1957 with an objective to provide
    insurance cover in respect of risks in export trade.
    • It was previously known as Export Risk insurance Corporation.
    • It is a Govt. of India Enterprise which provides export credit insurance
    facilities to exporters and banks in India.
    • It is the seventh largest credit insurer in the world in terms of national
    exports and its present paid up capital is Rs.1000 crores.
    EXIM Bank
    • Export-Import bank of India is the premier export finance institution
    in India which was established in 1982 under the Export-Import Bank
    of India Act,1981.
    • It is a key player in promotion of cross border trade and investment.
    • It provides financial assistance to exporters and importers not only of
    India but also of the world countries.
    • It finances joint ventures in foreign countries.
    • It provides technical, administrative and financial assistance to parties
    in connection with export and import.
    Direct General of Foreign Trade(DGFT)
    • DGFT is a government organization in India responsible for the
    formulation and implementation of EXIM policy, guidelines and
    principles for Indian importers and exporters of the country.
    • Before 1991, DGFT was known as the Chief Controller of Imports and
    Exports(CCI&E).
    • It administers laws regarding foreign trade and investment in India.
    • It plays a very important role in the development of trading relations
    with countries and also helps in improving economic growth.
    NUMERICALS:-
    • CALCULATION OF FOB PRICE:-
    1. Calculation of FOB cost= ex-factory price + expenses upto on
    boarding the ship.
    2. Calculation of FOB revenue = FOB cost +expected profit.
    3. Calculation of FOB price= FOB price + Duty drawback.
    ILLUSTRATIONS:-
    1. Calculate the FOB price to be quoted on an importer:
    i. ex factory cost=Rs 122000
    ii. packing charges= Rs 25000
    iii. expenses upto loading=Rs 20000
    iv. profit expected= 20% on FOB cost
    v. Duty drawback = 10% of FOB price
    vi. conversion rate= 1$= Rs 50.
    • Solutions:-
    FOB cost =ex factory price +( packing charges + loading charges)
    =122000 + 25000 + 20000 = 167000
    FOB revenue =FOB Cost + Expected profit
    =167000 + 20% = 200400
    FOB price = FOB revenue = FOB price + duty drawback
    let FOB price be 100
    FOB revenue = 100 + 10% = 110
    FOB Price = 200400 * 100 /110= 182182
    FOB Price ( in $) = 182182/50 = $3664
    • CALCULATION OF CIF PRICE:-
    1. Calculation of FOB cost= ex-factory price + expenses upto
    onboarding the ship.
    2. Calculation of FOB revenue = FOB cost +expected profit.
    3. Calculation of FOB price= FOB price + Duty drawback.
    4. Calculation of CIF price = FOB price + freight +insurance.
    • Calculate the CIF price in USD from the following data:
    Cost of materials: Rs 300000
    Cost of wages and packaging : Rs 50000
    Local transportation and Insurance upto port of shipment : Rs 20000
    Marine freight and insurance: Rs 25000
    Duty drawback : Rs 10% of FOB cost
    Conversion rate: 1 USD = Rs 39.50
    SOLUTIONS:-
    FOB cost= Ex factory price + expenses upto onboarding the ship
    FOB cost = cost of raw materials + wages and packing + local transportation
    =300000 + 50000 +20000 = Rs 370000
    FOB revenue= FOB cost + Expected profit
    =370000 + 10% = Rs 470000
    FOB price= FOB revenue = FOB price + duty drawback
    Let FOB price be 100
    FOB price= 407000*100/110 = Rs 370000
    CIF = FOB + freight + Insurance
    = 370000 + 25000 =Rs 395000
    CIF Price ( in USD) = 395000/39.5 = $ 10000

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