Export Development Fund
Export Development Fund
An Export Development Fund (EDF) facility is a unique fund initiated by the Government of India under the Exim Bank Act and governed by the Exim Bank. The Exim bank approves the loan for the enhancement of international trade and towards accomplishing the purposes of improving and encouraging the export in surplus. The Exim Bank under Government of India’s ‘Act East Initiative’ has embarked on a mission to extend trade to CLMV countries (Cambodia, Laos, Myanmar and Vietnam) in a Project Development framework. The Federation of India Exporters Association (FIEO) has requested an Export Development Fund with an amount of 0.5% of export value for Micro, Small and Medium Enterprises (MSMEs) in the budget 2019.
Objectives and Project Components
The Export Development Fund was launched with two main objectives:
- To reform the already existing export policies and its administration.
- To support the Government of India in boosting the competitiveness and exports of the manufactured goods in the country.
The programs other target goals include:
- To assist eligible and potential exporters in finding out, compete and sustain the export markets through aids and assistance.
- To support the exporters in export marketing.
- To complement the existing aids with long- and short-term lending funds for export linked investments. The export development fund project will integrate with the following financial institutions in achieving its target:
- Bank of Baroda and
- Canara Bank
Components under the Program
Every integrated program in each financial institution incorporates the following components:
- Export Development Fund (EDF) to support exporters in enhancing their marketing, product development and technological knowledge for a well-structured export development plans and programs by offering them grants.
- Technical Assistance Fund (TAF) to strengthen and assess export development programs and investments and help the exporters in these areas by boosting the capabilities of the financial institutions.
- Promoting export-based subprojects for boosting exportable output by delivering investment funds through term lending components.
Features of the Program
The Export Development Fund (EDF) is implemented to benefit the new and existing enterprises in improving their export development plans in the following ways:
- The program would help entrepreneurs in establishing market targets, field research and interact in person with their potential buyers and discover the source of buying decisions and the nature of hurdles that the enterprise would face during the export development process.
- The field research would help the entrepreneurs in drafting out a market analysis report and thwart their enterprise in exploiting the targeted customers and in overcoming the hurdles.
- The market analysis report would help the entrepreneurs in dealing with the hurdles and help them in achieving the export sales export growth by establishing a sales network, designing brochures etc.
Benefits under the Program
The Government has initiated the below steps to support entrepreneurs in improving the export activities and therein boost the foreign exchange for the country:
- A new Foreign Trade Policy(2015-2020) was implemented on 01st April 2015 to revise the already existing export promotion schemes. Further, two more new schemes namely Merchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme (SEIS), were implemented to develop export trade and services in the country.
- Entrepreneurs can completely transfer their duty credit scrips that are issued under the scheme.
- Incentive rates for MSME sector are hiked by 2% with a financial allotment of8,450 Crores per year.
- A new Logistic Division is set up in the Department of Commerce to synchronise the cohesive development of the logistics industry. The World Bank’s Logistics Performance Index of India has seen major growth since then and raised its place from 54 in 2014 to 44 in 2018.
- Efforts are taken by the Government to support the entrepreneurs in improving the comfort of doing business.
- Interest Equalisation Scheme was introduced to offer interest equalisation at 3% rate for labour intensive/MSME enterprises on pre and post-shipment rupee export credit on 1st April 2015.
- The rate was hiked to 5% for MSME enterprises from 2nd November 2018, and merchant exporters were included in the scheme.
- Trade Infrastructure for Export Scheme (TIES) was implemented on 1st April 2017 to tackle the export infrastructure gaps in the country.
- With a view to increase the income of the farmers and encourage the agricultural exports in the country, the Agriculture Export Policy was implemented on 06th December 2018.
- Transport and marketing Assistance (TMA) scheme were implemented to reduce the elevated cost of transportation for export of listed agricultural products.
- Entrepreneurs can claim a refund of duties/taxes at higher rates for the expenses spent on the export of garments under the Rebate of State and Central Taxes and Levies (RoSCTL) scheme launched on 07th March 2019.
Funds Allocated under the Program
The entrepreneurs can obtain the fund under the Export Development Fund:
- In the form of loans, gifts, grants or donations from the Government of India.
- Funds would be credited as a mode of repayment of loans, advances or other facilities.