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The Export-Import Bank of India has signed an agreement with the Uniao De Bancos Brasileiros (Unibanco), one of the largest private sector Brazilian banks, providing a line of credit of US$10mn, to finance India’s export of equipment, goods and services to Brazil.

This is the second credit extended by India Exim to Brazil, which is emerging as a big market for India. Brazil is a key member of Mercosur (along with Argentina, Uruguay and Paraguay), a regional trading association of Latin America, with whom India signed a preferential trade agreement last year.

At a Forum on ‘Regionalism and South-South cooperation: The case of Mercosur and India’, held in Rio on June 9, it was projected that India’s trade turnover with Mercosur would leapfrog to US$13bn from the current level of less than US$1bn, and India’s exports would scale a new high of US$9.5bn from the present level of US$653mn within the next few years.

At the forum on the role of the private sector, potential areas for cooperation between India and Mercosur were highlighted as food processing, drugs and pharmaceuticals, aviation, telecommunications, information technology, engineering goods, automobiles and components, textiles and clothing.

During the event, preliminary discussions were also held for launching a network of exim banks/export credit agencies (ECAs) around the world under the auspices of Uunctad. India Exim had, in 1996, taken the initiative to launch a forum of Asian ECAs, which has been playing a useful collaborative role in Asia.

India Exim’s lines of credit provide a risk-free, non-recourse export financing option to Indian exporters. Under the credit, importers based in Brazil will make advance payment of 10% of contract value and Exim will reimburse Indian exporters 90% of contract value, upfront on shipment of goods. The credit period available to importers through Unibanco ranges from six months to three years.

India’s exports to Brazil more than doubled in 2002-03 to stand at US$480mn. Exports of petroleum and crude products were major contributors. Other products in India’s export basket were pharmaceuticals and fine chemicals, inorganic/organic/agro chemicals, manmade yarn fabrics, made-ups, and machinery & instruments.

Besides Brazil, India Exim’s credit lines are also available for financing exports to other Latin American countries, including Mexico, Venezuela, Colombia, Ecuador, Peru, Bolivia, Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

Negotiations are on for setting up credit lines in other countries of the region.

For further information, contact PR Dalal at eximloc@ eximbankindia.com.