Page 272 - International Marketing

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274 International Marketing BRILLIANT'S

5. Advance against Incentives: The government of India, extends
certain incentives to the exporters such as the Duty Drawback (DBK) ,
International Price Reimbursement Scheme (IPRS) , etc. Such incentives
are realized only after the shipment of goods and receipt of the export
proceeds. Banks offer pre-shipment as well as post-shipment finance
against such incentives.
6. Advance against Undrawn Balances: In certain lines of exports,
exporters do not draw bills for the full invoice value of goods but leave a small
part undrawn for adjustments on account of differences in rates, weight,
quality etc. Such differences can be adjusted only on the approval of goods.
Banks offer post-shipment finance against such undrawn balances.
7. Advance against Retention Money: In the case of exports of capi-
tal goods or construction contracts, the importer retains a part of the con-
tract price towards guarantee of performance or completion of the projects.
This unpaid part is known as retention money for a period of 90 days.
8. Advance against Deferred Payments: In case of exports of capital
goods or construction contracts, the exporter receives a certain portion of
the contract price as advance or down payment while the balance is re-
ceived in installments over a period of time. Banks together with the EXIM
bank offer post-shipment finance against deferred payment at a
concessional rate of interest.
Difference between Pre-shipment Finance and Post- ship-
ment Finance

Points of Pre-shipment Finance Post-shipment Finance
Difference
1. Meaning Pre-shipment finance ref- Post-shipment finance re-
ers to the credit extended fers to the credit extended to
to the exporters prior to the the exporters after the ship-
shipment of goods for the ment of goods for meeting
execution of the export order. working capital requirement.
2. Purpose It is granted for specific Short-term finance is ex-
purposes such as purch- tended for meeting working
ase, processing,manufact- capital requirement and
uring or packing of goods medium and long-term for
as defined by the RBI. exports on deferred payment.

3. Amount of Generally, the amount of Post-shipment finance can
Finance packing credit does not be given to the extent of 100%
exceed the FOB value of of the invoice value of the