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Export Packing Credit

An exporter needs funds to procure raw materials and produce finished goods before sending shipment across the border. Packing credit facilitates the funding needs of an exporter to manufacture the goods for the shipment.

One can use export finance to meet varying working capital needs, like the purchase of raw materials, processing, manufacturing, warehousing, transportation, or packing of items required for shipping.

This type of loan is available at competitive interest rates to ensure exporters can get the necessary funds to complete orders. Export packing credit reduces the chances of missing out on available trade opportunities and helps a business grow to meet larger demands with credit being available. This is essential from the working capital perspective, as the buyers are often reluctant to make advance payments to the exporters.

Export Packing Credit - Features & Benefits

Get attractive features accompanying an export credit and repay with ease over a suitable tenor.

  • I. Need-based financing

    Loan amount is available based on the financing needs of the exporter. It makes purchasing the raw materials required for product manufacturing more convenient.

  • II. Available against a letter of credit or export order

    The financing is available against a confirmed export order or a letter of credit issued in the borrower’s name. The export packing credit limit calculation is completed based on the agreement document mentioning the buyer’s name, quantity, and value of goods required, shipment date, and any other terms, if applicable.

  • III. Flexibility in credit terms

    Enjoy the flexibility in credit terms as per customised export orders. Avail a packing credit loan for a suitable period depending on the payment terms to finance the interim export needs.

  • IV. Immediate disbursal of finance

    Avail finance immediately after providing documents like a letter of credit or export order to initiate manufacturing or procure items to be exported.

  • V. Attractive rates of interest

    Packing credit interest rates are comparatively more affordable as compared to other standard loans. This helps in better management of business finances.

  • VI. Repayment through export proceeds

    Borrowers can opt to repay the loan availed via packing credit facility on receipt of export proceeds. The repayment tenor thus depends on the manufacturing or trade cycle, or individual requirements of a specific export. The tenor usually extends up to 84 months.

  • VII. Conversion of pre-shipment obligations to post-shipment liability

    An option to repay from export proceeds also subjects the loan to conversion as a post-shipment liability from a pre-shipment one. So, the exporter is not required to repay the credit before the shipment, instead, he or she can make payment after the goods are shipped.

  • VIII. Available for merchant exporters as well as manufacturers

    Both merchants involved in export, as well as businesspersons manufacturing goods for the purpose of export, can avail the packing credit advances.

    Exporters can opt for a suitable advance from available types of packing credit, i.e., in INR as well as in foreign currency.

Eligibility Criteria for Export Packing Credit

To avail of an export packing credit, a business must have –

  • An Import Export Code (IEC) issued by the regional office of DGFT (Director General of Foreign Trade.)
  • A confirmed export order or a letter of credit.

Also, the exporter should deal with items listed under freely exportable goods. If the items to be exported fall under the negative list, he/she must acquire a license to export such goods.

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