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Exim Bank extends $25 mn credit line to Russia

Export-Import Bank of India is extending a $25 million line of credit to Vneshtorgbank (Bank for Foreign Trade) -- the largest Russian commercial bank -- to boost Indian exports to Russia.

The agreement to the effect was signed on Wednesday by Exim Bank general manager Prabhakar Dalal and vice-president of Vneshtorgbank Anatoly Chernyshev.

Though the amount of $25 million is "modest" given the size of the two banks, the credit agreement is an important milestone in boosting the traditional Indo-Russian trade, Dalal and Chernyshev said.

Russian importers would be able to import a whole range of capital goods and services from India, Dalal told reporters after the signing of the credit agreement.

Under the agreement, importers based in Russia will make advance payment of 10 per cent of contract value and credit will be provided by Exim Bank for 90 per cent of contract value to Vneshtorgbank.

Exim Bank will reimburse Indian exporters on shipment of goods. Credit in respect of capital and engineering goods is up to five years and in respect of industrial manufactures and consumer durables is up to two years.

India's exports to Russia amounted to $741.85 million during the first 11 months of 2001-2002, while imports from Russia were $481.82 million during the same period.

The main items exported from India to Russia are textiles and garments, drugs and pharmaceuticals, tobacco, electronic goods, machinery and instruments.

The main items of import from Russia include fertilizers, newsprint, non-ferrous metals, iron and steel, synthetic and reclaimed rubber.

Potential areas that Indian exporters can focus on are agricultural products, textiles including garments, machinery, drugs and pharmaceuticals.

Exim Bank of India had signed a similar agreement with another Russian bank Vneshekonombank for opening a $10 million credit line during Prime Minister Atal Bihari Vajpayee's visit to Moscow last year.

According to Dalal, Vneshekonombank would disburse fifty per cent of credit within the next few months.

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