Export Finance India 2026 | Pre & Post Shipment Funding Guide

Export finance bridges the working capital gap between production and payment receipt. Indian exporters have access to a robust ecosystem of bank credit, government-backed schemes, and credit insurance. This pillar guide covers every financing option available.

Why Export Finance is Critical

• Export cycles are long — 60 to 180 days between production and payment
• Buyers demand credit terms (30/60/90 days) that strain cash flow
• Raw material procurement, packaging, and freight must be funded upfront
• Currency risk and buyer default risk must be managed

Types of Export Finance

1. Pre-Shipment Credit (Packing Credit)

Working capital finance extended by banks to exporters before shipment. Used to procure raw materials, manufacture goods, and pack for export. Available in Indian Rupees (PCFC in INR) or foreign currency (PCFC in FC).

• Eligibility: Valid export order or LC in hand
• Tenure: Up to 270 days (extendable with bank approval)
• Interest Rate: Concessional rates under RBI guidelines (typically 7–9% p.a.)
• Security: Hypothecation of goods, export order, and personal guarantee

2. Post-Shipment Credit

Finance extended after shipment against export documents. Covers the period between shipment and receipt of payment from the overseas buyer.

• Export Bills Purchased/Discounted (EBP/EBD): Bank purchases or discounts export bills drawn under LC
• Export Bills Negotiated: Under confirmed LC, bank negotiates documents and pays the exporter
• Advances Against Export Bills Sent on Collection: For non-LC shipments
• Tenure: Up to 180 days from date of shipment

3. Export Credit in Foreign Currency (PCFC)

Pre-shipment credit in foreign currency at LIBOR/SOFR-linked rates. Cheaper than INR credit for exporters with foreign currency costs. Automatically hedges currency risk.

4. Buyer's Credit & Supplier's Credit

Structured trade finance where the overseas buyer's bank finances the transaction. Allows exporters to offer deferred payment terms without straining their own balance sheet.

ECGC — Export Credit Guarantee Corporation

ECGC provides credit insurance to Indian exporters against buyer default and country risk. Key products:

• Shipment (Comprehensive Risks) Policy: Covers commercial and political risks up to 90%
• Export (Specific Buyers) Policy: For regular exports to specific buyers
• Bank Guarantee: Enables banks to extend higher export credit limits
• NIRVIK Scheme: Enhanced insurance cover for MSME exporters — up to 90% cover at reduced premium

Government Export Finance Schemes

• Interest Equalisation Scheme (IES): Government subsidises interest on pre/post-shipment credit for MSME exporters and specified sectors — currently 2–3% subvention
• SIDBI Export Finance: Dedicated export finance for MSME exporters through SIDBI
• EXIM Bank Lines of Credit: Supports Indian exporters in developing markets through buyer country financing
• RoDTEP Scheme: Refunds embedded taxes and duties on exported goods

How to Apply for Export Finance

1. Approach your bank with a valid export order or LC
2. Submit IEC, RCMC, financial statements, and export documents
3. Bank assesses creditworthiness and sets a Packing Credit limit
4. Funds disbursed against each shipment
5. Loan liquidated upon receipt of export proceeds

Key RBI Guidelines for Export Finance

• Export proceeds must be realised within 9 months from date of shipment (15 months for project exports)
• eBRC must be filed with the bank within 21 days of realisation
• Overdue export bills must be reported to RBI via XOS statement
• FEMA compliance is mandatory for all export transactions

Related Pillar Guides

• How to Start Exporting from India
• IEC Registration India
• Export Documentation India
• Export Incentives India — RoDTEP, Duty Drawback & EPCG