CHAPTER - 1

INTRODUCTION

1.1 Introduction: A Closer look at EXIM Bank

The Export Import Bank (EXIM Bank) is the leading export finance organization of India
established under the umbrella of Export Import Bank (EXIM Bank) of India with the
specification in Act 1981, during the year 1982 (Chanana, 2009). Since its initiation, the
EXIM Bank act both as a key player and a catalyst in the upgrade of cross border
investment and trade. Initiating functions as a purveyor of credit of export, similar to
other Agencies of Export credit in the global level, the EXIM Bank of India (Chanana,
2010) for over the time period, developed into an organization that shows a principal role
in associating Indian industries, specifically the SMEs (small and the medium enterprises)
in their efforts of globalization, by means of broad range of services and products
provided at every phases of business cycle, beginning from the technology imports and
development of export products to the export marketing, export production, overseas
investment, post – shipment and pre – shipment. The EXIM Bank of India plays a
significant role as the source of finance, coordinator, promoter and consultation to the
foreign trade of India.

The EXIM Bank is a specific financial firm that is completely owned by the Indian
Government to assist the financial organizations in meeting the financial requirements.
The bank deals in the lines of credit in association with regional development banks
(Kilby, 2006), overseas financial institutions, other overseas entities and sovereign
governments. The EXIM Bank has laid strong importance on improving the project
exports and the funding preferences for which the bank has been improved with the
institution of the program of BC – NEIA (Buyer’s Credit – National Export Insurance
Account). The bank enables technology of two – way transfer through financing the
import of technologies into the Indian nation and the investments in the foreign nations by
the Indian organizations for making subsidiaries, joint ventures or making the overseas
acquisitions (EXIM bank, 2011). The EXIM Bank has set up the EMS (Export Marketing
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Services) Programmed in order to help the Indian firms in the identification of probable
business partners, that facilitates the placement of ending orders and also to find out the
prospects for creating projects or plants or for the procurement of firms overseas. During
the year 2012 – 13, the EXIM Bank had come out to be primary ever Indian entity to get
included in the index of emerging market bond. The bank came out of the first India
organization to tap the Singapore Dollar market and the Australian Dollar market.

From the initiation of this institution, EXIM Bank of India is working as a leading
mechanism and major player for the support and escalation of cross border business, trade
and foreign investments. The key tasks performed by the EXIM Bank includes to provide
the direct financial support to the exporters of assorted categories, to issues the shares,
bonds and stocks. In the span of year 2005-2006, the cumulative amount of credits given
by the bank was 150389 million, while this value was 220760 million in the recent
year. Many other chores are associated with the export import bank to cater the needs of
the exporters.

It was set up with the aim to finance, facilitate and promote the foreign or international
trade of India. It includes the share capital of 700 corers received from Government of
India; the paid-up capital on 31 March, 2014 was 3,759 corers. The Net Worth value is
Rs. 8,310 corer. Cumulative Profit after tax of the Bank for year 2013-14 was Rs.710
corers (Bhattacharaya, 1993).

To strengthen the respective and joint exchange and speculation in the middle of India
and Myanmar, the Bank opened its eighth abroad Representative Office in Yangon,
Myanmar. The Bank additionally plans to set up a Project Development Company in
Africa, which will basically hope to get framework ventures Africa to a bankable stage
and encourage sends out from India to Africa. The Bank, with its assorted projects, takes
into account diverse portions of exporters and the fare cycle. The Bank gives help with
offering Indian some assistance with locating so as to firm in their globalization
endeavors abroad. EXIM Bank likewise lays unique accentuation on improving fare

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capacities and worldwide intensity of Indian organizations through its different Advisory
Services.

Figure 1.1: Operational Philosophy of EXIM Bank of India

Figure 1.2: Lines of Credit

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EXIM Bank Augments Lines of Credit (LOCs) to abroad governments, money related
organizations, territorial banks and different abroad substances, to fund India's fares to
those nations (Kannan, 2009). EXIM Bank's LOC is a danger free, non-plan of action fare
financing alternative accessible to Indian exporters for advancing their fares. Under this
course of action, abroad merchants are required to pay advance installment to Indian
exporters, which is normally 10% of the agreement esteem. EXIM Bank pays the parity
sum, which is typically 90% of the agreement worth, to Indian exporters through
arranging banks in, endless supply of merchandise. EXIM Bank likewise works LOCs,
reported by the Government of India, to the nation's exchanging accomplices.

1.2 Objective and Goal of EXIM Bank

1.3 Background and purpose of the study

EXIM bank believes in promoting the business through personalized services and
perpetual relationship. It has strong commitment to stay competitive and serve the clients
of different strata in the society as well as to accelerate the pace of economic operation.
This research explores the impact of The EXIM Bank policies on the international
investment and trade promotion in our country. An attempt has been made to understand
the customer satisfaction towards the service quality of EXIM Bank of India. This
research investigates the satisfaction level of customers of EXIM Bank of Delhi branch in
special reference with NCR which acts as key player in international trade. The customers
of National capital region across Delhi, Noida, Gurgaon, Ghaziabad, and Faridabad were
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interviewed and primary data was collected to know the satisfaction level towards service
quality provided by EXIM bank of India.

On the other hand, a systematic study of export imports policies also known as trade
policies with the Foreign Direct investment policies during the period of ten years 2004 to
2016 has been studied. After studying the trade policies the next data set of same ten year
period of policies of EXIM Bank also analyzed. .As part of understanding the
environment better I have also included the investigation about the relationship between
economic growth and international trade in with respect to the Indian economic scenario
to make the study more holistic.

It has been my Endeavour as a researcher to rely on a combination of quantitative data

surveys that tracks customer satisfaction and qualitative insights from focus group
interviews. My vision is to study, analyze and benefit from deep diving into previous
papers, therioes, abstracts, journals which would work as search light in this dense forest
at night.

1.4 Statement of Problem

The EXIM bank in India plays an important role in promoting international trade by
means of increasing the import and exports. The EXIM offers loans and credit to the
Indian exporters and the importers in foreign nations.

Generally, the increase of international trade increase the economic growth of the country
(Rodriguez & Rodrik, 2000).The role played by EXIM bank in the export trade had been
clearly explained in the study carried out by (Prabhu, 2013).

This is an attempt is made to find out the performance rendered by the EXIM bank of
India. The research gap found in the study is that there is no study that analyzed the
importance of EXIM bank in promoting two way international investments in India
specifically during past 10 years which includes the financial crisis period (Khan, 2012).

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And to analyze the policies and functions of EXIM bank and its importance in promoting
then export and import in India. So this study intend to analyze the significance of EXIM
bank in promoting the export and import in India from 2004 to 2016 and its assistance in
developing economic growth of country. The study is in the footsteps of earlier studies on
India. It is different from earlier studies in the sense that it covers a period of 2004-2016
which includes the period of boom and financial crisis, and also more comprehensive.

EXIM bank is the apex financial institution and worked very hard to improve the service
quality as well as enhance their product and service to their customers. Researcher has
read out the previous articles and reports related to EXIM bank and other institutions
based on the financial background and financial analysis. This study is based on the
customer satisfaction level of clients of EXIM bank of India.

1.5 Research Topic

Table 1.1 - Fragmentation of Research Topic with Individual Significance,
Denotation and Variable Analysis
Independent Variable (IV) Assorted Regional
: Tangibles, Customer Locations. In our case,
Satisfaction, Assurance, there is NCR Region
Empathy, Internal and including Delhi,
External Cost Factors, Gurgaon, Noida,
Intervening Variables Faridabad and
IMPACT OF Ghaziabad

Test Units Products, Policies,

EXIM BANK POLICIES
Protocols and
Adaptability

ON INTERNATIONAL
Dependent Variable (DV) Past Experience, Facts,
: Gross Domestic Product Strategies, Plans,

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 (GDP), Foreign Direct Trends, Growth Factors
INVESTMENT Investment (FDI),
Overseas Operations,
Decisions to Trade,
AND International Trade,
Involvement of
Multinational Companies
TRADE PROMOTION
Association Rule Mining, Allocation and
Clustering and Attachment of multiple
IN INDIA Aggregation variables so that the
overall relationship and
glue factors can be
extracted

Empirical Generation, Analysis of Adaptability

Trade Practices, Export- Levels in Companies
Import Scenarios, with Trade Policies,
Adaptability of Investment Protocols,
Companies, Trading Credit Limits, Credit
Practices Protocols

Specific Case Scenario of Regional Trade Area

India so that particular (RTA) Analysis,
and focused investigation Analysis of Barriers
can be done towards Trade,
Affecting and
Correlation Factors in
specific scenarios

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1.6 Export Import Policies of GOI
The export import policifies of government of India function in parallel with the reserve
bank of Indi as well as export import banks of India so that the overall escalation and
growth in internation trade can be done effectively. In spite of the fact that the EXIM
Policy is declared for a five-year time span, reporting a Policy on March 31st of
consistently, inside the expansive edge of the Five-Year Policy, for the guaranteeing year

(Ghosh, 2004).

A vital component of the EXIM arrangement since 1992 is flexibility. Authorizing,

quantitative confinements and other administrative and optional controls have been

considerably wiped out. The Union Commerce Ministry, Government of India reports the

incorporated Foreign Trade Policy FTP in at regular intervals. This is additionally called

EXIM approach. This arrangement is redesigned each year with a few alterations and

new plans. New plans happen on the primary day of monetary year, i.e., April 1,

consistently. The Foreign Trade Policy which was declared on August 28, 2009 is an

incorporated approach for the period 2009-14 (Athukorala, 2009).

Export Import (EXIM) Policy outlines standards and directions for fares and imports of a

nation. This strategy is otherwise called Foreign Trade Policy. It gives approach and

system of the administration to be taken after for advancing fares and directing imports.

This approach is intermittently assessed to join important changes according to changing

local and global environment. In this arrangement, approach of government towards

different sorts of fares and imports is passed on to various exporters and shippers.

Send out alludes to offering merchandise and ventures to different nations, while import

implies purchasing products and enterprises from different nations. Presently in the time

of globalization, no economy on the planet can stay cut-off from rest of the world. Fare

and import assume a critical part in the monetary improvement of all the created and
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creating economies. With the development of universal associations like WTO,

UNCTAD, ASEAN, and so forth, world trade is developing at a quick rate.

Figure 1.3: Difference between Economic Growth and Economic Development

1.7 Targets of EXIM Policy

The important targets of this Policy are given below:

• To encourage supported development in fares to accomplish a share of at least 1

% of worldwide stock trade.

• To empower managed monetary development by giving access to basic crude

materials, intermediates, segments, consumables and capital merchandise required

for increasing creation and giving administrations.

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 • To upgrade the m
mechanical quality and proficiency of Indian horticulture, industry
and administrattions, subsequently enhancing their aggressiive quality while
creating new woork openings, and to support the accomplishm
ment of universally

acknowledged beenchmarks of value.

• To give custom
mers great quality merchandise and enterprisses at universally
focused costs w
while in the meantime making a level playing field for the local

create.

1.8 Foreign Direct IInvestment (FDI)

Foreign direct investmeent or simply FDI refers to the multi-dimensio
onal business deals
from cross-border corpoorate entities. In this aspect, the trading organiizations broadcast,
market and sell their products
p as well as services in other countriies with the prior
acquiescence and agreem
ments (Sharma, 2000).

In many cases, the foreeign investment includes the merger or simply acquisitions
a of the

n that region. The

existing business organizations to support and enhance the services in

taxonomy and dimensioons of Foreign Direct Investment with brief disscussion are given
below.

Taxonomy of
Foreign Direct
Investment

Conglomerate Greenfield
Horizontal Vertical Platform
/ Platform Investmentx

Backward Forward

Figure 1.4: Taxxonomy and Dimensions of Foreign Direct Inv

vestments
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Horizontal FDI – It is one of the basic and foremost types of the FDI investment which
the company or business entity performs the functioning in other country in same domain

with same services. Classically, this type of FDI is implemented by most of the corporate

giants to enhance and expand their business objects. As an example, the company Toyota

is manufacturing and assembling the automobile systems in assorted countries (Blonigen,

2007).

Vertical FDI – This type of foreign direct investment refers to the integration of

backward and forward investment in the services and products. In backward vertical

investment, the industry operates in a remote country with the inputs from the home

country. In case of forward vertical foreign investment, the system is associated with the

promotion as well as selling with the output services, products and related aspects from

the home location (Blonigen, 2007).

Platform FDI – This type of foreign direct investment involves the business from the
source country to the remote destination country with the basic purpose of export to the

third remote country. It involves the association and agreements in the multiple countries

(Blonigen, 2007).

Conglomerate FDI – It involves the integration and implementation of business having a

separate and new business in a remote country. This is one of the most unique and highly

sensitive types of FDI because of implementation of a new industry in a new country

(Blonigen, 2007).

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D. Greenfield FDI [8] – This type of FDI involves the integration or simply assembly of

the components and then trading in another country. The same concept is integrated with

Honda in UK (Blonigen, 2007).

1.9 Relevance of Customer Satisfaction

Customer satisfaction is the most important parameter in the service sector in which the
key attributes of customer behavior as well as the feedback perspectives (Buttle, 1996). It
is paramount in the interest of organization as well as social cause to fulfil the needs as
well as the expectations of the customers so that multi referral business can be executed.
In traditional aspects, customer satisfaction is known as CSAT which is having assorted
parameters on which the customer service performance is evaluated.

Figure 1.5: Customer Satisfaction

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 F
Figure 1.6: Customer Satisfaction Graph

Figgure 1.7: Customer Satisfaction Key Points

1.10 Research Objeectives

1. To analysis the eexisting status of international investment and traade policies of
government of Inndia.
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 2. To analyze the role of EXIM bank of India in promotion of International Trade.
3. To analyze the satisfaction level of EXIM bank clients.
4. To investigate the relationship between economic growth and international trade.

1.11 Organization of Study

The Chapter plan of the study is so designed that the whole study is comprehensively

covered in five Chapters. The Chapters plan as follows:

Chapter 1 extends a prefatory view of the study about the introductory view of EXIM
bank and its policies with overview to traditional philanthropic approach. The Chapter
then talks about the overview about various trade policies with a specific time phrase
which are the backbone of our economic growth. Then the next part of this Chapter talks
about the satisfaction level of clients in banking industries. After that the brief discussion
about affiliation in the international financial trade as well as fiscal growth is presented.
The second part associated with the Chapter includes a statement of rationale, research
gap and scope of study and finally the Chapter plan of study is presented.

A brief survey of literature related to various aspects of trade policies, EXIM Bank
policies and majoring satisfaction level of clients in Banking industries with associations
of financial performance has been included in Chapter-2

Chapter-3 discusses the research design of the study in Detail. It defines the research
questions empirically examined, research hypothesis, research variables along with the
methodology used in survey instrument and in secondary data analysis. The Chapter
further outlines statistical tools and research model applied to test the research hypothesis
and achieve research objectives.

Chapter-4 which represents the core of study, contain result and interpretation of the
survey result. Chapter-4 present the analysis and interpretation of survey result using
statistical tools and techniques based on the response received. The result of discussion
and conclusion of comprehensive statistical investigations are presented for each
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hypothesis are discussed in this Chapter The secondary data of specified financial years
were analyzed to access the relationship between international trade and economic
growth. Using suitable methodology research attempt to find the best predicator among
analyzed variables of economic growth. The Chapter consolidates the finding, discussion
and conclusion of this part of analysis.

Key Findings, Summary, conclusion, suggestion and future research are presented in
Chapter-5 followed by Bibliography and annexure.

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