During your long and illustrious tenure at Exim Bank, how have you seen the bank evolve to a more customer friendly organization?
Exim Bank over the years has remained a bank at an apex level. We don’t have direct customer interaction and we don’t take small or big deposits from people. Our interaction is more with the industry and trade who are our customers. Our size has grown with time, diverse products have been introduced to service more customers.
Export Import Bank (Exim Bank), set up in 1982 is primarily a financing agency for encouraging exports and imports trade from India. The Bank has initially concentrated more on export credit finance of various types to facilitate exports. We are now more into medium term finance & long-term finance for project exports. We also finance projects setup by an Indian company overseas that helps facilitate exports on long term basis
The Maritime sector is an important sector which Exim Bank considers for financing. We concentrate on the sector primarily because, shipping is the most outward looking industry and facilitates international trade.
What can we learn from other countries- from their experience in developing and supporting financing models for this sector
We have been looking at the shipping & maritime sector in a very positive way. International shipping, as an industry must compete exclusively with international competition. In view of the internal and external competition, you always face challenges of providing long term low cost fund, where cost or maturity is benchmarked to international rates. Indian maritime companies have a problem of mobilising long term low cost funds, when compared to their International counterparts.
Countries which have succeeded like China and Korea have been able to provide funds for long duration at lower rates also. They also have specific funds available for buyer’s credit, which helps the shipbuilding industry.
It looks necessary, for the maritime sector to grow in India, to set up a fund to provide Long term low cost finance, including by way of Buyer’s Credit, with suitable flexibility to meet the unique needs of the sector. In developing a financing model for the maritime sector, we would need to consider a flexible Long Term Finance model which would require its own set of rules and match the needs of the changing economy, and the ambitious development aspirations of the sector.
What has been the experience of EXIM Bank in this sector, so far- How attractive does the maritime sector look
Maritime sector has been conventionally associated with international trade. The global trade pattern itself is undergoing a change. While the volume of international trade could be low, global growth is projected between 2% and 2.5 % in next 4-5 years. Even if you take world trade at that level, you could have reasonable growth in international trade. The Indian maritime sector, including inland waterways and costal shipping, has a promising future. There is now a thrust on developing the maritime and logistic sector in India, and as a vast country it could automatically generate increased volume of trade, which in-turn will support the growth of the maritime sector. India also has entered into two important agreements, one with Bangladesh and the 2nd one is with Myanmar, which virtually converts this international trade route into domestic.
What impact do you see from the several well-intentioned projects/initiatives announced by the government like Sagarmala, Infrastructure status for shipbuilding etc.?
Sagarmala and inland waterways essentially change the whole complexion of maritime trade in this country. We predominantly use road or railway for transporting cargo today. Declaration of additional national waterways, setting up Sagarmala project and developing inland waterways including the creation of national waterways, would enable more cargo to be moved by maritime routes.
The Infrastructure status of inland waterways, enables taking up major inland waterways project. Indian cargo to the north-east part of India, could start using maritime route. Today you have a situation where cargo goes to the north east by rail then by road, and that could change fast. Once this happens then a ship sailing from Kolkata can pick the cargo from north India and move it to the north east through Bangladesh or Myanmar, which is an important initiative. Further, the dedicated freight Corridor could bring much more cargo from other parts of India to Kolkata, for onward shipment to North East, Bangladesh and Myanmar. Considering all this, I look at a bright future for Maritime sector, in India. While international activity may take some time to pick up, however in the domestic trades, I can see the business growing.
In your views, how can EXIM bank collaborate with the other stakeholders in the maritime ecosystem to support the end customer/cargo owner, who is the exporter/importer
Exim Bank is primarily a financing agency. We have the financial program and other programs. For any merchant or manufacturer-exporters looking for market for their products, destinations, purchaser details etc, we have developed a portal for them. We want to take international trade and trading opportunities to small and large exporters.
We wish Maritime Nation India a healthy growth.