|
In a strategic move to expand India’s global export footprint, the Directorate General of Foreign Trade (DGFT) has introduced a new intervention under the Export Promotion Mission (EPM) aimed at strengthening export financing and improving trade access to under-served markets. The initiative is expected to benefit Indian pharma manufacturers, who are increasingly exploring emerging and high potential markets.
The intervention focuses on improving global trade connectivity and liquidity in markets where financial or institutional barriers often restrict cross-border transactions. Backed by the Government of India and implemented through the Export-Import Bank of India (Exim Bank) in partnership with the National Credit Guarantee Trustee Company Ltd (NCGTC), the scheme will provide risk sharing support for trade finance instruments used by exporters.
“For India’s pharmaceutical exporters, many of whom operate as MSMEs within global supply chains, the initiative could unlock access to markets where payment risks, limited banking networks, or restricted credit lines have historically limited trade. By providing government-backed credit enhancement, the scheme will enable commercial banks to extend trade finance for exports to such markets with reduced risk exposure,” according to the DGFT.
The program is designed to support bank-intermediated export transactions, allowing Indian exporters to use a range of non-recourse credit instruments such as standby letters of credit, risk participation arrangements, and confirmed letters of credit. These instruments can strengthen payment security and ensure smoother settlement of trade transactions.
A major advantage for pharma exporters lies in Exim Bank’s established international network. The bank currently maintains partnerships with over 140 overseas banks across 60 countries, which can facilitate stronger financial collaboration between Indian banks and local banks in target markets. Such partnerships are expected to improve financing channels and expand export opportunities for Indian pharmaceutical companies.
Under the scheme, eligible MSMEs with a valid Importer-Exporter Code and Udyam Registration can apply for support through the DGFT portal by generating a Unique Identification Number (UIN). The financing requests will then be processed through participating commercial banks, which will work with Exim Bank to obtain risk-sharing coverage.
The intervention will initially be implemented on a pilot basis, allowing policymakers to collect feedback, refine operational mechanisms, and strengthen the framework through data-driven improvements.
The initiative will enhance the capacity of scheduled commercial banks to support cross-border trade transactions involving markets where trade lines are constrained or where the potential has not been harnessed, and transactions may not materialise in the absence of such support. It will also enable local banks in target countries in establishing working partnerships with large number of commercial banks in India.
“For India’s pharmaceutical industry, which is one of the country’s strongest export sectors, the initiative could open doors to new demand centers in emerging economies, while reducing financial barriers that often prevent smaller exporters from entering high-risk markets. By improving trade finance access and strengthening global banking partnerships, the program aims to enhance India’s competitiveness and accelerate growth in pharma exports,” according to trade experts.
|