Distinguish between pre shipment and post shipment
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Export Pre Shipment and Post Shipment Finance. Pre ShipmentFinance is issued by a financial institution when the seller want the payment of the goods beforeshipment. The main objectives behindpreshipment finance or pre export finance is to enable exporter to: Procure raw materials.
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Pre-Shipment investment leads to the credit continued to the exporters prior to the purchase of goods for the accomplishment of the shipping order.
Post-shipment investment leads to the credit continued to the exporters after the consignment of goods for meeting the effective capital requirement.
It is awarded for shipment as marketing, processing, production or consignment of goods as specified by the Reserve Bank of India. Short-term finance is continued for satisfying the working capital condition and medium and long-term for exports on partial payment.
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