Page 267 - International Marketing

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BRILLIANT'S Export Management 269

tions due to the prevalence of novel non-price competitive techniques en-
countered by exporters in various nations to enlarge their share of world
markets. The exporter may require short term, medium term or long term
finance depending upon the types of goods to be exported and the terms
of statement offered to overseas buyer. The short term finance is required
to meet "working capital" needs. The working capital is used to meet
regular and recurring needs of a business firm. The regular and recurring
needs of a business firm refer to purchase of raw material, payment of
wages and salaries, expenses like payment of rent, advertising, etc. The
exporter may also require "term finance". The term finance or term loans,
which is required for medium and long term financial needs such as pur-
chase of fixed assets and long term working capital.
Export financing is an important area of export business. It is short-
term working capital finance allowed to an exporter. It refers to the credit
facilities extended to the exporters of pre-shipment and post shipment
stages. It includes a loan to an exporter for financing the purchase, pro-
cessing, manufacturing or packing of goods, meant for overseas market.
Credit is also extended after the shipment of goods to the date of realiza-
tion of export proceeds.
Export finance is provided by various institutions, like, Reserve Bank
of India, Commercial Banks, Export Import Bank of India and Export Credit
Guarantee Corporation, etc.
Objectives of Export Finance
There are two main objectives of export finance, which are as follows:
 To cover commercial and non-commercial or political risks at-
tendant on granting credit to a foreign buyer.
 To cover natural risks like an earthquake, floods, etc
Documentary Evidences for Obtaining Export Finance
1. Confirmed export order or Letter of Credit in original. Where it is
not available, an undertaking that it would be submitted within a
reasonable time.
2. An undertaking that the advance will be utilized for the specific
purposes for which it has been procured.
3. Copies of income tax assessment orders for the past two to
three years in case of a sole proprietorship and partnership firm.
4. In case the indirect exporters, an undertaking from the concerned
export house/trading house stating that they do not wish to ob-
tain packing credit facility against the same transaction.