Fund the order pre-shipment. Monetise the bill after.
An engineering-goods exporter with strong demand from Europe and the Gulf was funding exports on a plain rupee line and waiting months to get paid. The full export-credit toolkit was sitting unused.
Illustrative, representative case - not a verified individual client file. Company identities, figures and locations have been changed to protect confidentiality. Outcomes depend on lender appraisal and are not commitments.
₹78 crore in turnover. Exports to Europe and the Gulf. An IEC, Udyam registration, and a promoter with genuine international-trade experience.
Strong demand. Good buyer relationships. A growing order book.
And a financing structure that was actively throttling how much of it could be accepted.
Overseas buyers paid 60–90 days after shipment. But raw material had to be sourced before production even started.
The firm was funding pre-shipment on a small rupee line, then waiting months for realisation. Every working-capital rupee was locked in the pipeline - from procurement through production, shipment, and collection.
Orders were being turned down. Not because of capacity. Because of cash.
The firm wasn't using the export-credit toolkit India's banking system is built to provide.
Pre-shipment finance - packing credit - exists precisely for this: fund procurement and production before the cargo ships. Post-shipment finance - foreign bills purchased or discounted - exists for the other end: monetise the invoice the moment the shipment leaves.
With ECGC-backed cover, banks price export credit keenly. The MSME export interest subvention (2.75% p.a. under the Export Promotion Mission's Niryat Protsahan sub-scheme, operational from January 2026, capped at ₹50 lakh per firm per year) reduces the effective cost further. Note: the earlier Interest Equalisation Scheme lapsed on 31 December 2024.
We structured ₹15 crore of export finance across two phases:
Pre-shipment: packing credit in foreign currency (PCFC), benchmarked to SOFR for USD after the LIBOR transition, or rupee EPC as preferred.
Post-shipment: foreign bills purchased and discounted (FBP/FBD) - turning each shipped invoice into near-immediate cash.
Placed with a private bank running a genuine forex and trade desk. ECGC whole-turnover packing-credit cover was layered on (bank cover to 90% of principal and interest), and the firm was registered for the MSME subvention.
We prepared the CMA with an export-order-backed drawing plan and coordinated ECGC cover alongside forward-cover guidance for currency risk. FIFO liquidation of packing credit was set against each export bill.
The bank queried one buyer's country risk. We mapped it directly against ECGC's cover list - and resolved it.
Sanction: ~7 weeks.
Pre-shipment funding meant larger orders could be accepted. Post-shipment discounting compressed realisation from ~75 days to ~15 on the discounted pool.
With the subvention, the effective export-credit cost fell into the high-single digits - from the ~9.5–12.5% gross band typical for MSME export credit.
Turnover grew toward ~₹100 crore.
"We ship more because we no longer wait for the money."
- Promoter, Export Business
Exporters should use the full pre- and post-shipment stack, not a plain rupee line.
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