Trade Finance – India

2023 Guide | Trade Finance Global

Trade Finance - India

Welcome to the India Trade Finance and International Trade hub. Find out how our India-based team can help you access trade finance to increase your imports and exports, or find the latest research, information and insights on trade finance here.

What is trade finance?

Trade Finance is the financing of goods or services in a trade or transaction, from a supplier through to the end buyer. It accounts for 3% of global trade, worth some $3tn annually. ‘Trade Finance’ is an umbrella term, which includes a variety of financial instruments that can be used by an importer or exporter.

These include:

  • Purchase Order Finance
  • Stock Finance
  • Structured Commodity Finance
  • Invoice Finance (Discounting & Factoring)
  • Supply Chain Finance
  • Letters of Credit (LCs) and;
  • Bonds & Guarantees

The terms Import Finance and Export Finance are used interchangeably with Trade Finance.

In order to address some of the common issues and misunderstandings around Trade Finance, we have put together this short guide.

How can trade finance benefit my India based business?

Trade finance facilitates the growth of a business by securing funds required to purchase goods and stock. Managing cash and working capital is critical to the success of any business. Trade finance is a tool which is used to unlock capital from a company’s existing stock or receivables or add further finance facilities based on a company’s trade cycles.

Why does this help?

A trade finance facility may allow you to offer more competitive terms to both suppliers and customers, by reducing payment gaps in your trade cycle. It is beneficial for supply chain relationships and growth.

Other benefits of trade finance

  • Short to medium-term working capital, using the underlying products or services being imported/exported as security/collateral. It increases the revenue potential of a company, and earlier payments may allow for higher margins.
  • Trade finance allows companies to request higher volumes of stock or place larger orders with suppliers, leading to economies of scale and bulk discounts. 
  • Trade finance can also help strengthen the relationship between buyers and sellers, increasing profit margins. It allows a company to be more competitive.
  • Managing the supply chain is critical for any business. Trade and supply chain finance helps ease out cash constraints or liquidity gaps – for suppliers, customers, third parties, employees or providers. Earlier payments also mitigate risk for suppliers.

It is important to note that trade finance focuses more on the trade than the underlying borrower, i.e. it is not balance sheet led. Therefore, small businesses with weaker balance sheets can use trade finance to trade significantly larger volumes of goods or services and work with stronger end customers.

Due to the embedded risk mitigants that surround trade finance lending and instruments, it leads to the potential of a diversity of supplier base for trading companies. A more diverse supplier network increases competition and efficiency in markets and supply chains.

Companies can also mitigate business risks by using appropriate trade finance structures. Late payments from debtors, bad debts, excess stock and demanding creditors can have detrimental effects on a business. External financing or revolving credit facilities can ease this pressure by effectively financing trade flows.

 

Get started – talk to our India team



If you have a trade finance enquiry, please use the contact form below.

 

Finance Queries:

in.team@tradefinanceglobal.com

trade.team@tradefinanceglobal.com

Partnership Queries:

introducers@tradefinanceglobal.com

Find out more about partnering with us here.

 

Want to learn more about Trade Finance?

Look no further. We’ve put together our feature India trade finance insights, research, and articles, and you can catch the latest thought leadership from the TFG, listen to podcasts and digest the latest in international trade in the region right here.

From the Editor – Trade Finance Insights

VIDEO | Bpifrance – French export market overview, an exclusive interview with the French ECA At Excred International, Trade Finance Global’s (TFG) Deepesh Patel sat down with Maëlia Dufour, director international relations, business development, rating, environment and climate at Bpifrance and president of the Berne Union, to learn more about the intricacies of the trade credit industry.
An uncertain landscape: Five trade finance trends for 2023 As uncertainty remains in global supply chains and trade finance, the International Trade and Forfaiting Association’s (ITFA) Lynn Galkoski, Director, Trade Product & Portfolio Management with BNY Mellon Treasury Services shares her insights on trends that may arise this year.
Finastra - Compliance, digitalisation, and ESG VIDEO | Finastra – Compliance, digitalisation, and ESG: navigating emerging trends in trade finance To learn more about some of the emerging trends in the trade finance ecosystem, Trade Finance Global (TFG) spoke with Elena Sankova, global solution consultant and head of European pre-sales for working capital and cash management at Finastra.
trade briefing 02062023 TFG Weekly Trade Briefing, 6th February 2023 Your Monday morning coffee briefing from TFG: RELEASED – Trade Finance Talks – Sailing into 2023: Navigating the new year To agriculture and beyond: a look at how IoT technology… read more →
TFG Weekly Trade Briefing, 30th January 2023 TFG Weekly Trade Briefing, 30th January 2023 Your Monday morning coffee briefing from TFG: VIDEO | Think data, not documents: advancing MLETR in 2023
23 January Weekly Briefing TFG Weekly Trade Briefing, 23rd January 2023 Your Monday morning coffee briefing from TFG: Shifting the mindset towards innovation in ports
TFG Weekly Trade Briefing, 16th January 2023 TFG Weekly Trade Briefing, 16th January 2023 Your Monday morning coffee briefing from TFG: UK Freeports: catalysts for regional economic development and recovery
2-6 Data Standards - Pradeep Nair - Standard Chartered Data standards: a key to a truly sustainable trade For sustainable trade finance to scale, the industry needs a uniform model for ESG data that can be used by everybody, says Pradeep Nair, Global Head of Structured Solutions and Development of Standard Chartered Bank
Podcast Ep 95 Featured Image SME Finance Forum GPFI PODCAST: The lifeblood of global trade: improving financial inclusion for SMEs TFG spoke to two leading policymakers at the G20 on how to improve financial inclusion for SMEs.

Videos – Trade Finance

Trade Finance – Frequently Asked Questions

What types of Trade & Receivables Finance does TFG offer?

TFG assists companies to access trade and receivables finance through our relationships with 270+ banks, funds and alternative finance houses.

We assist specialist companies to scale their trade volumes, by matching them with appropriate financing structures – based on geographies, products, sector and trade cycles. Contact us to find out more.

Trade Finance & Stock Finance

  • Trade Finance (Purchase Order Finance)
  • Stock Finance
  • Pre Export Finance
  • Import & Export Finance
  • Structured Commodity Finance
  • Letters of Credit
  • Bonds & Guarantees

Receivables Finance & Invoice Finance

  • Receivables Purchase
  • Invoice Finance
  • Discounting
  • Factoring
  • Supply Chain Finance

Specialist Trade & Receivables Finance

  • Borrowing Base Facilities
  • Back-To-Back LC Lines
  • Long Dated Receivables – Media, Sport
  • Revolving Credit Facilities (RCF)
What is the process for applying for trade finance?

1. Application

The initial ‘credit’ application drives the process when applying for credit.

Lenders will often ask for information on current assets or collateral that the business owns, including debt and overdrafts, assets that the company or directors own (property, equipment, invoices).

2. Evaluating the Application

The evaluation process will normally involve some kind of credit scoring process, taking into account any vulnerabilities such as the market the business is entering, probability of default and even the integrity and quality of management.

3. Negotiation

Eligible SMEs applying for trade finance can negotiate terms with lenders. An SME’s aim with a lender is to secure finance on the most favourable terms and price. Some of the terms that can be negotiated can include fees and fixed charges, as well as interest rates.

4. The Approval Process and Documentation of a Loan

Typically, the account officer who initially deals with the applicant and collects all of the documentation will do an initial credit and risk analysis. This then goes to a specific committee or the next level of credit authority for approval. If the loan is agreed (on a preliminary basis) it goes to the legal team to ensure that collateral can be secured/ protected and to mitigate any risks in the case of default.

Read our full ‘trade finance application process’ here.

Strategic Partners:

Get in touch with our India trade team

Speak to our trade finance team

Quick Links

Download our free trade finance guide



Latest India Trade News

23Feb

ADB discusses $25bn for Indian development programmes

0 Comments

Asian Development Bank (ADB) President Masatsugu Asakawa and India Prime Minister Narendra Modi met today to discuss the country’s development… Read More →

21Feb

India and Singapore create cross-border digital payment system

0 Comments

India and Singapore have linked their digital payments systems, UPI and PayNow, to enable instant and low-cost fund transfers in… Read More →

16Feb

US-India deepening trade ties: Air India and Boeing deal to create one million jobs in the US

0 Comments

The Air India-Boeing deal will create up to one million jobs across 44 states in the US. The deal will… Read More →

06Feb

TFG Weekly Trade Briefing, 6th February 2023

0 Comments

Your Monday morning coffee briefing from TFG: RELEASED – Trade Finance Talks – Sailing into 2023: Navigating the new year… Read More →

30Jan

Indian Shipping Ministry releases maritime logistics portal

0 Comments

The Ministry of Ports, Shipping and Waterways on Friday launched the national logistics portal–marine (NLP-M), a single-window platform aimed at… Read More →

30Jan

Blockchain trade finance: Contour and Tata Power forge new partnership

0 Comments

Tata Power, an integrated power company in India, has partnered with Contour, a digital trade finance network based out of… Read More →

30Jan

TFG Weekly Trade Briefing, 30th January 2023

0 Comments

Your Monday morning coffee briefing from TFG: VIDEO | Think data, not documents: advancing MLETR in 2023… Read More →

27Jan

Egypt and India seek to boost international trade through a strategic partnership

0 Comments

Egypt and India announced Thursday a “strategic partnership” to increase trade by billions of dollars and strengthen diplomatic ties, as… Read More →

23Jan

ADB and Nhava Sheva Freeport Terminal Private Limited sign a $131m loan to enhance international trade

0 Comments

The Asian Development Bank (ADB) and Nhava Sheva Freeport Terminal Private Limited (NSFTPL) signed a $131 million loan to upgrade… Read More →

23Jan

TFG Weekly Trade Briefing, 23rd January 2023

0 Comments

Your Monday morning coffee briefing from TFG: Shifting the mindset towards innovation in ports… Read More →

16Jan

TFG Weekly Trade Briefing, 16th January 2023

0 Comments

Your Monday morning coffee briefing from TFG: UK Freeports: catalysts for regional economic development and recovery… Read More →

13Jan

India and US establish trade group to support supply chains

0 Comments

India and the United States have established a new working group to build sustainable supply chains and boost bilateral trade,… Read More →

15Dec

Q&A | CBI’s Liliana Fratini Passi on open banking and risk appetite

0 Comments

Trade Finance Global (TFG) are delighted to have had the opportunity to speak with Liliana Fratini Passi, Managing Director, CBI,… Read More →

10Oct

Data standards: a key to a truly sustainable trade

0 Comments

For sustainable trade finance to scale, the industry needs a uniform model for ESG data that can be used by… Read More →

08Sep

PODCAST: The lifeblood of global trade: improving financial inclusion for SMEs

0 Comments

TFG spoke to two leading policymakers at the G20 on how to improve financial inclusion for SMEs…. Read More →

18Aug

India reduces Russian oil procurement, but Saudi Arabian imports see an increase

0 Comments

The course of this last year has seen a fluctuation within fuel markets. Like many other countries, India has experienced… Read More →

27Jul

Is the time ripe for the formation of a global receivable exchange?

0 Comments

In 2019, FCI formed a working group called “Receivables as an Investable Asset Class” (RIAC). It was comprised of FCI… Read More →

25Jul

TFG Weekly Trade Briefing, 25th July 2022

0 Comments

Your Monday morning coffee briefing from TFG: Is SME trade finance viable? A European outlook… Read More →

Visit our Global Hubs

TFG in Translation

About the Author

Joana Fabiao is the Marketing Manager at Trade Finance Global (TFG).

She holds a BA in International Business from the University of Westminster, with a core focus on Global Economic Issues, International Financial Management and Organisational Behaviour. She also holds a certificate in Bloomberg Market Concepts.

Prior to working at TFG she worked as Junior Consultant in the Marketing and Events Department at Westminster Business Consultants, focusing on their social media campaigns, content and marketing strategy.

Back to Top