Appendix F: Emerging Market Export Credit Agencies
http://www.exim.gov/about/reports/compet/compet2004.pdf
Introduction
While the participants and issues in the world of official export credits has slowly evolved over the last few decades, the status quo is being challenged by the emergence of an “alternate ECA world”, led by the rapidly growing ECA systems in China, Brazil and India. Not since Japan emerged in the 1960s as a major provider of capital equipment and export credits has the export credit arena seen the scope and scale of change that is likely to occur in the next five years.
The recent rapid growth in activity of the Chinese, Brazilian and Indian ECAs reflects a concerted effort on the part of their respective governments to expand the competitive position of their export sectors worldwide. These ECAs have grown so dramatically since the turn of the century that their activity now substantially exceeds that of many OECD ECAs. For example, by 2004 the total medium- and long-term ECA support from China’s two official export credit providers probably put them in the top five ECAs globally. [Total medium- and long-term “activity” of the ECAs from all three countries is about one-quarter of OECD ECA activity.]
This chapter represents the first step in an ongoing Ex-Im Bank effort to evaluate the competitive implications of the official support provided by the Chinese, Brazilian and Indian ECAs. Ex-Im Bank conducted research on these ECAs by speaking with exporters and banks who have had competitive experience with these ECAs, reviewing annual reports and press clips and, in some cases, interviewing officials from these ECAs. However, information on the specific terms and conditions offered by these ECAs in competitive situations is very limited, in part because they are not members of the OECD. Nevertheless, there is reason to believe that some (if not much) of the export credit support offered by these ECAs may not be consistent with OECD Arrangement terms and conditions.
The remainder of this chapter will provide an overview of each country’s strategic focus and philosophy regarding exports and export finance, generate (to the extent possible) a comparative data reference, summarize export credit programs to illustrate how they support national export strategies and provide a preliminary indication of competitive implications for Ex-Im Bank.
Overview
China’s exports have risen dramatically over the last several years, from $249 billion in 2000 to $593 billion in 2004. The United States is China’s largest export market with a 21% share, followed by Hong Kong at 17% and Japan at 12%. Principal export products include office machines and data processing equipment, telecommunications equipment, apparel and clothing, electrical machinery and textiles.
In 2002, the Chinese government implemented a “Going Out” strategy to encourage domestic enterprises to export and invest abroad. While part of this strategy involves trade with the major developed economies, China is also rapidly expanding trade with other developing countries. “Directed” official export credit support (e.g., for certain sectors, such as telecommunications, in select markets) is seen as one way to establish Chinese market share in riskier markets where major multinational corporations have less exposure.
China has two government entities that support Chinese exports and carry out Chinese trade policy – the Export-Import Bank of China (China Eximbank) and Sinosure. China Eximbank provides short-, medium- and long-term loans and guarantees for Chinese exports while Sinosure provides short-, medium- and long-term export credit insurance. Sinosure insurance may also be used in combination with China Eximbank funding. However, the extent to which Sinosure insurance and China Eximbank lending overlap is not completely clear. Nonetheless, it is known that the two institutions are not required by law to do business with one another, which is a common practice in other Asian countries such as Japan.
Export-Import Bank of China (China Eximbank)
China Eximbank was established in 1994 as a wholly government-owned entity under the guidance of the State Council. Its mandate is “to implement state policies in industry, finance, foreign trade and economy, to promote the export of Chinese mechanical and electronic products and high and new tech products, to encourage well established Chinese enterprises with comparative advantages to implement the national strategy of ‘going out’, and to enhance Sino-foreign economic and technological cooperation and exchanges by means of providing policy financial support.”
China Eximbank achieves this mandate by offering a variety of export financing products, including export loans, export credit guarantees and concessional loans. China Eximbank will provide preferential terms for priority projects by major Chinese enterprises. Since its inception, China Eximbank has increased its loan activity consistently by focusing on industries such as China’s hightech sector. In 2003 (2004 data is not yet available), the China Eximbank approved new credits worth 8.3 billion USD, with a total year-end exposure of 30.4 billion USD. Major sectors receiving support include shipping, power and high-tech industries.
China Eximbank provides loans to both exporters and overseas buyers of Chinese exports. For exporter credits, the China Eximbank requires a down payment of at least 15%, and interest rates are determined by the People’s Bank of China. Supplier credits target specific sectors such as shipping, high technology products and mechanical and electrical products. Buyer credits (many of which are “big-ticket” projects such as telecom and power station projects), on the other hand, are provided on terms and conditions that, according to the China Eximbank’s web site, “generally follow the Arrangement.” Interest rates are either fixed or floating rates. The maximum repayment term is 15 years from the first disbursement of the loan. In addition, China Eximbank requires a minimum 15% down payment.
Like many OECD governments, China Eximbank provides concessional loans to support both foreign policy and national industrial development goals. Unlike OECD governments, China Eximbank does not necessarily follow the tied aid rules of the Arrangement, which ensure that trade-related aid is truly aid and not trade distorting. In fact, given that the program is geared towards “manufacturing projects with favorable economic returns” and must be linked to Chinese procurement, this program is highly likely to be trade distorting.
Specific information on the terms and conditions of China Eximbank’s soft loans is not available; however, anecdotal evidence from U.S. exporters suggests that the loans are priced just low enough to sway purchasing decisions without providing the 35% concessionality the Arrangement requires. Two key sectors that U.S. exporters believe are Chinese concessional lending targets are resource exploration and high technology products (e.g., telecom). U.S. high technology exporters believe that China Eximbank is providing soft loans to commercially viable sectors in developing economies to establish market share. Resource-rich developing countries in Africa and the Middle East have been the primary beneficiaries of Chinese soft loans. In 2001, the last year China Eximbank publicly provided such data, the total volume of China Eximbank’s concessional lending reached 10.6 million RMB (128 million USD).
Figure F1: China Eximbank Activity 2000-2004 (in $mns)
| China Eximbank | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | NA | NA | 980 | 2850 | NA |
| M&L term | NA | NA | 4560 | 8690 | NA |
| Total | NA | NA | 5540 | 11540 | NA |
* It should be mentioned that the M/LT data is probably overstated by $1 billion or more because it includes investment loans. In addition, the ST data is also probably overstated as it contains some MT data as well. These discrepancies are due to the need to proxy disaggregation of aggregate data to achieve a comparable table.
Sinosure
Sinosure is a wholly state owned export credit insurance agency that was formed in December 2001 as a result of the merger between the export credit insurance system of People’s Insurance Company of China and China Eximbank. Sinosure is headquartered in Beijing with a national service network of 12 regional offices and seven representative offices. Sinosure’s mandate is “to support the export of goods, technology and services, especially high-tech and high value added capital goods, to provide Chinese enterprises with protection against payment risk and to facilitate the development of overseas markets.” In addition, a related goal is to facilitate the financing of export transactions and to improve the competitiveness of Chinese companies in international markets and provide them strong support in their overseas expansions.
To achieve this objective, Sinosure offers a number of programs aimed at the export financing needs of the Chinese economy. These programs include short-, medium- and long-term export credit insurance, investment insurance, export related bonding and guarantees. Furthermore, Sinosure has initiated special programs aimed at the top 200 Chinese exporters by offering priority services to major companies and “best customers.” In addition, the Chinese government announced in October 2004 that it would pay half of the premium charged by Sinosure to encourage increased use of Sinosure’s programs.
Since 2001, Sinosure’s medium and long-term support has increased from $940 million to $1.36 billion in 2003. Total activity was near $6 billion in 2003 and Sinosure recently announced a goal of doing $20 billion in 2005. U.S. exporters indicate they are seeing increasing competition from Sinosure in sub-Saharan Africa, particularly in Nigeria.
Figure F2: Sinosure Activity 2000-2004 (in $mns)
| Sinosure | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | 1940 | 1430 | 1750 | 4260 | NA |
| M&L term | 1770 | 940 | 820 | 1360 | NA |
| Total | 3710 | 2370 | 2570 | 5620 | NA |
Competitiveness Impact
China’s “Going Out” strategy could pose a significant competitive threat to U.S. exporters. This potential threat is due largely to their apparent willingness to provide concessional financing as a means of establishing market share in developing countries. This practice has already been identified as an area of concern by U.S. exporters.
Figure F3: Total Chinese Officially Supported Export Finance (in $mns)*
| China | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | 1940 | 1430 | 2730 | 7110 | NA |
| M&L term | 1770 | 940 | 5380 | 10050 | NA |
| Total | 3710 | 2370 | 8110 | 17160 | NA |
* This probably overstates the total business done by China Eximbank and Sinosure. This is due to the fact that Sinosure insures a portion of China Eximbank’s business. As mentioned above, the extent to which the two agencies work together is uncertain.
Overview
Brazil’s exports have nearly doubled in the past few years, increasing from $55 billion in 2000 to $96 billion in 2004. Although Brazil is a major agricultural exporter, the majority of its exports are industrial goods. In fact, Brazil’s largest export sector by dollar volume is aircraft, with domestic manufacturer Embraer one of the leading aerospace manufacturers globally. Other key capital goods exports include oil and gas equipment, automotive equipment and telecommunications.
Brazil has two primary export credit agencies. Banco Nacional de Desenvolvimento Econômico e Social (BNDES), or the Brazilian Development Bank, provides direct loans. Seguradora Brasileira de Crédito à Exportação (SBCE), or the Brazilian Export Credit Insurance Agency, provides export credit insurance. In addition, Banco do Brasil administers Programa de Financiamento as Exportacoes (PROEX), or Export Financing Program, which offers both direct loans and interest rate equalization for banks providing trade finance. (The PROEX program seems to have diminished in importance relative to BNDES and SBCE; hence, this section will not address PROEX further.) An inter-ministerial committee, the Export Finance and Guarantee Committee (COFIG), makes overall export credit policy; monitors PROEX and the Export Guarantee Fund (FGE), which backs SBCE; and approves PROEX and SBCE transactions over approximately $5 million dollars.
Banco Nacional de Desenvolvimento Econômico e Social (BNDES)
BNDES was created in 1952 to be the main source of long-term financing for the Brazilian domestic economy. Similar to Germany’s KfW, BNDES serves many domestic development functions in addition to providing export finance, including social programs, infrastructure support and the development of small and medium-sized enterprises (SMEs). BNDES’ total disbursements have ranged from $11 billion to $18 billion from 1997 to 2004.
BNDES began its export finance program in 1991. The program has four key objectives:
1. Offer financing for the export of goods and services of “greater added value” under internationally competitive conditions;
2. Increase Brazil’s export base, with an emphasis on SMEs;
3. Generate foreign currency, income and employment; and
4. Promote the integration of South America (an overarching Brazilian government goal).
Because Brazil’s domestic banks are unable to provide long-term financing for Brazilian exporters, and because foreign banks are unwilling to finance Brazilian exports with a Brazilian government guarantee, BNDES operates as the country’s primary provider of medium- and long-term export finance. Thus, the “internationally competitive conditions” articulated in the first objective above mean that BNDES will both meet official export credit competition on OECD Arrangement terms and private finance on market terms (i.e., market window financing). Rather than operating as a lender of last resort, BNDES is Brazil’s trade finance lender of only resort.
Three factors constrain and philosophically parameter the aggressiveness with which BNDES pursues its mission of providing competitive financing to its exporters, regardless of the source of competition. First, the Brazilian government’s cost of funds is high enough that BNDES could easily deplete its capacity if it over-subsidized loans. Second, a large portion of BNDES funding derives from national unemployment insurance and social security programs paid for by payroll taxes. BNDES is extremely sensitive to stewarding these funds, given the dire political and economic consequences it would face by mismanaging these key social safety nets. Finally, BNDES’ export credit program is subject to a certain amount of domestic suspicion from those who question why the Brazilian government “gives” money to foreign buyers – particularly in other developing Latin American countries – when Brazil itself is in need of money. BNDES must demonstrate that its foreign lending has a positive effect on the Brazilian economy and is not a subsidy for other countries. Stemming from the need to carefully steward its financial resources, BNDES requires a bank guarantee or SBCE insurance cover on its loans to mitigate potential losses.
BNDES provides direct loans for both short-term pre-shipment (working capital) and medium- and long-term post-shipment transactions. Its post-shipment support includes both suppliers’ and buyers’ credits. In the last five years, total export credit support has comprised one-quarter to onethird of BNDES’ overall activity. Medium- and long-term loans make up 50%-70% of BNDES’ export credit volumes (by annual disbursement). Approximately 40% of its medium- and long-term support goes toward aircraft sales. Another major sector for BNDES is oil and gas equipment. Most of BNDES loans are for exports to other Latin American countries, largely because these are the main markets for Brazilian capital goods exports. On the other hand, most BNDES supported aircraft sales are to the U.S. market. BNDES is trying to expand its markets with a focus on China, Vietnam and Iran. In the past five years, BNDES has supported anywhere from 24% to 34% of Brazil’s national exports, providing support to 250-300 exporters.
BNDES uses Libor as the base rate for its loans. It charges a 2% spread for its risk, and the guaranteeing bank will charge an additional spread. Additional commitment fees or other charges may also be added. BNDES generally tries to reference the Arrangement, although it will provide more flexible terms when necessary. BNDES will typically not offer more than 12-year repayment terms, and its average repayment term is eight years. However, it has provided up to 20-year repayment terms, including for exports to China’s Three Gorges Dam. It will also provide 15-year terms for aircraft transactions. BNDES will finance 100% of an export transaction, rather than the OECD’s required 85% maximum, although BNDES will not provide local costs support. When BNDES loans receive SBCE cover on behalf of the Brazilian government, SBCE will charge a premium in compliance with the Arrangement.
Figure F4: BNDES Activity 2000-2004 (in $mns)
| BNDES | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | 1303 | 969 | 1278 | 1981 | 1921 |
| M&L term | 1779 | 1663 | 2669 | 2025 | 1940 |
| Total | 3082 | 2602 | 3947 | 4006 | 3861 |
[Excludes domestic loans.]
Seguradora Brasileira de Crédito à Exportação (SBCE)
SBCE was created in 1997 to provide export credit insurance for Brazilian exporters. It is 24% owned by the Brazilian government (12% by Banco do Brasil and 12% by BNDES) and 27% owned by Coface, with the remaining sha res held by private banks. Similar to Coface, SBCE provides medium- and long-term insurance on behalf of the government, and short-term insurance is provided on its own account. COFIG, the inter-ministerial committee, meets monthly to decide on all SBCE transactions over $5 million. SBCE’s official export credits are backed by the Export Guarantee Fund (FGE), a Brazilian Treasury account.
SBCE works very closely with BNDES to provide official export credit support for Brazil’s exports. BNDES, the state development bank, provides funding for transactions, while SBCE will provide credit risk insurance for the transaction, so rather than competing with one another they provide complementary roles in financing Brazilian exports. Approximately 98% of SBCE’s medium- and long-term export credit insurance is provided to transactions where BNDES is the lender, with the remaining 2% insuring Banco do Brasil loans. In addition, BNDES holds half of the Brazilian governments shares in SBCE. The two agencies also collaborate in the management of the FGE, with SBCE responsible for risk monitoring and portfolio analysis and BNDES responsible for accounting.
SBCE’s medium- and long-term insurance volumes have averaged approximately $600 million a year from 2001 to 2003. There was a dramatic surge in the transaction volume level in 2002; the increase was attributed solely to transactions for the United States. The United States was the destination for almost 70% of SBCE’s insured transactions, most likely for aircraft sales. The rest of SBCE’s activity went primarily to other Latin American and Caribbean countries.
SBCE indicates that it generally complies with Arrangement rules, with the exception of regional aircraft transactions where Canada’s market window, EDC, is its biggest competitor.
Figure F5: SBCE Activity 2000-2004 (in $mns)
| SBCE | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | 208 | 187 | 1381 | 202 | na |
| M&L term | 0 | 198 | 1336 | 733 | na |
| Total | 208 | 385 | 2717 | 935 | na |
*2004 activity levels for SBCE are not yet available.
Competitiveness Impact
The Brazilian ECAs’ support for Embraer aircraft is currently the main potential competitive threat to U.S. exporters (see Chapter 4A for more information). Exporters in other sectors have noted Brazil as a competitor, and this could increase as these ECAs expand their activity. Although the majority of the Brazilian ECAs export support goes to the U.S., Latin America is a market where U.S. exporters should expect to see competition from Brazilian companies. The sectors where this activity is likely to be concentrated in include transportation equipment (automobiles and rail) and telecommunications. As Brazil’s economy matures and Brazilian companies become more engaged in manufacturing of capital equipment, competition may expand to other industry sectors like petrochemicals.
Figure F6: Total Brazilian Officially Supported Export Finance (in $mns)
| Brazil | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | 1307 | 973 | 1306 | 1985 | NA |
| M&L term | 1779 | 1667 | 2696 | 2040 | NA |
| Total | 3086 | 2640 | 4001 | 4025 | NA |
*2004 activity levels are not shown because SBCE activity levels are not yet available.
BNDES may also pose competitive problems for Ex-Im Bank, and consequently U.S. exporters, as it functions as a market window. Market windows and their competitive implications are discussed in more depth in Chapter 5B of this report, in the context of EDC of Canada and KfW of Germany.
Overview
India’s economic performance has been impressive since undertaking widespread economic reforms in the early 1990s. India has posted an average GDP growth rate of 6% since 1990, and achieved a robust 8% growth rate in 2003/2004. Led by large numbers of highly educated English-speaking people, software services alone are estimated to reach 7% of India’s total GDP and 35% of India’s total exports by 2008.
India's exports have grown from $45 billion in 2001 to over $60 billion in 2003, registering a 33% increase. Preliminary IMF 2004 data suggest total export volume will approach $80 billion in 2004. Major export sectors include engineering, gems and jewelry, auto components, pharmaceuticals and textiles. India’s Foreign Trade Policy plan for 2004-2009 hopes to double India’s share of world merchandise trade within five years. Included in the strategy are 220 export items and 25 markets that would receive special attention.
India has two export credit agencies: the Export Import Bank of India (India Eximbank), which provides loans and guarantees, and the Export Credit Guarantee Corporation of India (ECGC), which provides export credit insurance and guarantees to commercial banks only. India Eximbank and ECGC have similar roles in that they are both key public sector trade promotion institutions in India. Given the importance of export promotion in India, India Eximbank and ECGC play important roles in advancing trade policy by enhancing the competitiveness of India’s export sector and expanding the geographical reach of Indian products.
India Eximbank and ECGC also have distinct roles in that they provide different export credit products and each institution forms its own partnerships with the private sector banks and private sector insurers. The bulk of India Eximbank’s financing is provided on medium terms (there are select long-term transactions) while ECGC provides mostly short terms. There is modest collaboration between India Eximbank and ECGC, although ECGC may insure large export contracts supported by India Eximbank. Data representing the extent to which ECGC acts as an insurer on India Eximbank transactions is unavailable.
Historically dissimilar roots also separate India Eximbank and ECGC. At its inception in 1957, ECGC’s main function was to provide official export credit insurance. However, at that time India’s trade policies focused on import finance rather than export finance. By the early 1980’s, India realized that its import substitution policies were discouraging exports. As a result, trade policy shifted from import finance to export finance, and India Eximbank was established to implement India’s export policy. India Eximbank became the central export funding institution while ECGC continued in its role as official export credit insurer.
Export Import Bank of India
Established by an Act of the Indian Parliament in 1981, India Eximbank is India’s principal provider of trade finance and export promotion. Its goal is to finance, facilitate and promote India’s international trade and investment. Although India Eximbank is a public sector institution, approximately 80% of its total resources are funded through the market on its own authority.
India Eximbank provides several products aimed at the pre-export production process as well as performance bonds and guarantees. In addition, India Eximbank offers post shipment direct loans and lines of credit. India Eximbank’s target markets are Africa, Latin America and China.
Lines of credit appear to be a major vehicle for the provision of India Eximbank support. In 2004, India Eximbank extended 12 lines of credit worth $168 million to the governments of Ghana, Zambia, Sudan, Angola, as well as the Central Bank of Djibouti, Eximbank of Hungary, the West African Development Bank, and six Iranian banks. India Eximbank currently has 28 lines of credit worth $530 million available to 51 countries.
The 2000-2004 data for total India Eximbank lending activity (as presented from India Eximbank and shown in the table below) includes all lending and guarantee programs, of which approximately 60% represents export credit contracts and the remaining 40% is comprised of loans for building export competitiveness.
Based on 2004 data , short-term activity totaled $647 million and medium-and long-term activity totaled $2,173 million. Total Indian Eximbank activity has been steadily increasing. This trend reflects the growing importance of export promotion in India.
Figure F7: India Eximbank Activity 2000-2004 (in $mns)
| India Eximbank | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | na* | 79 | 151 | 259 | 647 |
| M&L term | na* | 1420 | 1481 | 1965 | 2173 |
| Total | na* | 1499 | 1632 | 2224 | 2820 |
* Data not available.
2004 data indicates that India Eximbank approved 164 export contracts amounting to $1.7 billion in 48 countries for 96 Indian exporters in 2004. By contract type, the deals were broken down as follows: 28 turnkey projects valued at $921 million; 11 construction contracts valued at $333 million; 114 supply contracts valued at $437 million and 11 consultancy contracts worth $33 million.
India Eximbank finances a wide range of sectors, including textiles (11%), petroleum and petrochemicals (10%), pharmaceuticals (10%), and “other categories” which includes engineering services, information technology services, financial services, hospitality services, auto components, consumer goods, gems and jewelry, etc. (31%). The remaining 38% is comprised of capital goods, telecommunication, chemicals, and metal.
India Eximbank will finance up to 90% of the contract value of the exports it supports. Eligible products are classified into two product groups. Group A includes capital equipment and may receive credit terms ranging from three to 11 years, although 3-5 year terms are most common. Group B is comprised of consumer durables and industrial items usually exported on a cash basis, with maximum credit terms of 2 years. When providing rupee loans, India Eximbank sets a fixed market-based interest rate, while it will provide foreign currency loans on a floating rate basis with a spread over Libor.
Export Credit Guarantee Corporation of India (ECGC)
Founded in 1957, ECGC operates under the administrative control of the Ministry of Commerce and Industry but like India Eximbank, it raises funds in the market. Its mission is “to support and strengthen the export promotion drive in India.” Of note, the Ministry of Commerce and Industry is also the oversight body for concessionary financing.
To accomplish this broad mandate, ECGC offers a range of credit risk insurance products to exporters and financial institutions. Insurance cover is available for short, medium and long terms. ECGC also provides pre-shipment support, guarantees for commercial bank loans, and exchange rate fluctuation cover on a risk shared basis with the exporter for both pre and post shipment financing. In addition, ECGC provides foreign direct investment insurance. Banks financing exports, including India Eximbank, are eligible for ECGC cover. ECGC insurance covers approximately 11% of India’s exports. ECGC is the only official trade insurance agency but may share coverage with private insurance companies for short-term insurance.
Of ECGC activity in 2004, short-term insurance (new business) totaled $7,811 million and medium- and long-term insurance totaled $288 million. Total ECGC activity has been generally uneven in three key regions since 2000. According to ECGC, this trend reflects periodic downturns in business investment attributable to sluggish African economies, the outbreak of SARS in Asia, and political uncertainty in Latin America.
Figure F8: ECGC Activity 2000-2004 (in $mns)
| ECGD | 2000 | 2001 | 2002 | 2003 | 2004 |
| Short-term | 5518 | 5055 | 8115 | 6062 | 7811 |
| M&L term | 72 | 174 | 58 | 131 | 288 |
| Total | 5590 | 5229 | 8173 | 6193 | 8099 |
ECGC coverage spans an array of sectors, including engineering (14%), chemicals (12%), leather (9%), textiles (7%) and “other categories” (40%). The remaining 18% includes sectors such as gems and jewelry, tea and handicrafts.
ECGC will provide 90% cover on insurance policies for commercial and political risks. The remaining 10% is borne by the exporter. ECGC reserves the right to offer a lower percentage of cover in certain cases. Premia vary depending on the payment terms, country risk classification, and type of risk covered (commercial, political, or a combination of the two). Based on the information available, ECGC will generally issue coverage for up to a one-year term, but terms may be extended for longer-term transactions.
Competitiveness Impact
The terms offered by the Indian ECAs appear to be generally consistent with the OECD Arrangement. Repayment terms of 3-11 years are more or less in line with OECD guidelines. Interest rates are market-oriented. As prescribed by the OECD Arrangement, Indian ECA premia are risk-differentiated. Indian ECAs generally observe the OECD guideline of charging a 15% cash payment, although they operate on a scale that ranges from 10% to 20% depending on the program.
Figure F9: Total Indian Officially Supported Export Finance (in $mns)*
| India | 2000 | 2001 | 2002 | 2003 | 2004** |
| Short-term | 5518 | 5055 | 8115 | 6062 | NA |
| M&L term | 793 | 679 | 941 | 2009 | NA |
| Total | 6311 | 5732 | 9056 | 8071 | NA |
* This may overstate the total business done by India Eximbank and ECGC. This is due to the fact that ECGC insures a portion of India Eximbank’s business. As mentioned above, the extent to which the two agencies work together is uncertain.
**2004 activity levels are not shown because ECGC activity levels are not yet available.
India’s impressive growth has hinged on their ability to provide high-level services relatively inexpensively, be they in the engineering, telecommunications, software development, or financial services arenas. When this expertise is combined with their “loose” application of the Arrangement, the result may have competitive implications for U.S. service providers.