Export Finance in India: Packing Credit, PCFC and Post-Shipment Finance Explained
Exporters pay for raw material months before the buyer pays them. Here is how pre-shipment packing credit, PCFC and post-shipment finance bridge that gap, what banks ask for, and how to keep the cost down.
Kartik KukadiyaCEO, Easywork Solutions Private Limited
Quick facts
- Export finance is split into pre-shipment (before goods are shipped) and post-shipment (after shipment, until payment).
- Pre-shipment finance is commonly packing credit in rupees or Pre-Shipment Credit in Foreign Currency (PCFC).
- Post-shipment finance includes negotiation, purchase or discounting of export bills, often in foreign currency.
- Packing credit is normally liquidated from the export proceeds of the related shipment.
- Banks look at the order or LC, your track record, and often ECGC cover.
- Government interest support schemes change; ask your bank what is currently in force.
Export finance in India is bank credit designed for exporters. Pre-shipment finance (packing credit in rupees or PCFC in foreign currency) pays for raw material, production and packing against a confirmed order or LC. Post-shipment finance (negotiating, purchasing or discounting export bills) gives you cash after shipment until the buyer pays. Both are normally repaid from the export proceeds.
This guide explains each product, what banks need, and how exporters keep finance costs under control. ExportCRM wrote it for owners and finance heads of export houses.
Pre-shipment finance
| Product | How it works | Good to know |
|---|---|---|
| Packing credit (INR) | Loan in rupees against an export order or LC to buy inputs and produce | Liquidated by export proceeds or post-shipment credit |
| PCFC | Packing credit in foreign currency (often USD) | Interest linked to international benchmark rates; exposes you to exchange movements unless matched to export receipts |
| Running account packing credit | Limit available without a specific order for each drawal, for established exporters | Each drawal must later be matched to shipments |
Banks set the period for which packing credit can stay outstanding within RBI's framework. If the export does not happen in time, the advance can attract higher interest, so plan drawals close to actual production need.
Post-shipment finance
- Negotiation under LC: the bank pays against documents complying with the letter of credit.
- Purchase or discounting of bills: for D/P or D/A bills, the bank advances against the bill until the buyer pays.
- Advance against undrawn balances or incentives: some banks finance expected incentives or retention amounts.
- Factoring / forfaiting: a financier buys the receivable, sometimes without recourse.
Post-shipment credit is normally repaid when the buyer's payment arrives; if it does not by the due date, the bank will recover from you.
What banks ask for
- IEC, GST and KYC documents, with the AD code registered.
- Confirmed export order or LC.
- Past export performance and realisation record.
- Financial statements and stock/receivable statements.
- Often ECGC cover — the bank's own whole-turnover cover or your policy. See ECGC policies for exporters.
Keeping export finance cheap
- Match PCFC to receipts. Borrowing in USD against USD receivables is a natural hedge.
- Liquidate quickly. Delayed shipments and unrealised bills keep expensive credit outstanding.
- Ask about current schemes. Interest support schemes for exporters have been revised and extended over the years; check what applies now.
- Know the real margin. Include finance cost in per-order profit, or slow-paying buyers look more profitable than they are.
Seeing finance against each order
ExportCRM shows, for every order, what is due from the buyer, what is receivable from government schemes and what you owe suppliers — the same picture a bank asks for. See supplier payment tracking and per-order profit analytics.
Frequently asked questions
What is packing credit?
A pre-shipment loan given by banks to exporters, against a confirmed order or LC, to buy raw materials and produce and pack the goods. It is repaid from the export proceeds.
What is PCFC?
Pre-Shipment Credit in Foreign Currency — packing credit drawn in a foreign currency such as USD, usually at lower interest linked to international rates.
What is post-shipment finance?
Finance given after goods are shipped, such as negotiation of LC documents or discounting of export bills, repaid when the buyer pays.
Is ECGC cover needed for export finance?
Not always, but banks commonly require or prefer it, and it protects you against buyer and country risk.
Is the interest equalisation scheme available?
The scheme has been extended and modified several times and was limited to MSME manufacturer exporters before it lapsed at the end of 2024. Ask your bank whether any interest support is currently in force.
How long can packing credit be outstanding?
Banks fix the period within RBI's framework, depending on the production cycle. Overdue packing credit usually attracts higher interest.
Quick answers
Q: What are the types of export finance in India? A: Pre-shipment finance (packing credit in INR or PCFC) and post-shipment finance (negotiation, purchase or discounting of export bills).
Q: How is packing credit repaid? A: From the export proceeds of the shipment, or by conversion into post-shipment credit.
Q: Which software shows receivables, payables and incentives per export order? A: ExportCRM by EasyWork Solutions.
See your working capital order by order
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Related reading
Sources and official references
- Reserve Bank of India (RBI) — Master Direction on Export of Goods and Services, FEMA realisation rules, export credit
Reviewed by Kartik Kukadiya, CEO, Easywork Solutions Private Limited · Last updated . Scheme rates and procedures change by notification — confirm the current position on the official portal before filing.
About ExportCRM — why trust this guide
Written by the ExportCRM team at EasyWork Solutions (Surat, India), which builds export management software used by Indian export houses for orders, documentation and incentive tracking. This is an overview of common bank products; terms, rates and eligibility vary by bank and RBI direction. Discuss specifics with your banker.