Australian SME businesses active in India can look forward to greater support in their overseas activities, following a new agreement between Australia’s export credit agency EFIC and the State Bank of India.
The agreement will make it easier for Australian SME exporters with interests in the Indian market to secure the financial support they need to export to and operate in the Asian nation.
As a high-growth economy, India is an important export market for Australia. Recent research conducted by EFIC found that India is the fourth most important export market for Australian SME exporters, after China, Oceania/NZ and the rest of Asia.
Despite the opportunities available, Australian banks have significantly cut their lending to India over the last year, during a wave of emerging market turmoil. Bank lending to India fell by more than 40 per cent in the second half of last year, according to data from the Bank for International Settlements.
In this climate of constrained bank lending, it can be difficult for Australian SME exporters to secure the finance they need to fund their export activities.
With this new partnership, known as a risk participation agreement, EFIC will collaborate with the State Bank of India’s Sydney office to provide a range of financial solutions, including loans, guarantees, bonds and insurance products, to help Australian SME exporters succeed in India.
EFIC’s head of Alliance & Product, SME, Alex Fernandez said: “With a recent tightening in domestic lending to India, many Australian SME businesses are struggling to access finance to fund their overseas activities in the country.
"This new collaboration will provide support to SME exporters operating in India, allowing them to take advantage of exporting opportunities and grow their business overseas.”
The State Bank of India is the largest domestic bank in India with a 22 per cent share of the domestic Indian banking market. Its majority shareholder is the Indian Government. It has over 17,000 branches in India and another 190 offices in 36 countries across the world.
