Export Financing Options in India: Pre-Shipment vs Post-Shipment Finance

What is export financing?

Export financing is the umbrella term for credit that supports an export order. It splits into two stages: pre-shipment finance, which funds the production and packaging before goods leave India, and post-shipment finance, which unlocks cash from goods already shipped. Every Indian exporter, from a single shipment to a rolling order book, sits somewhere on this spectrum.

The goal of both is the same — keep working capital moving so you can take the next order. The tools, documents and pricing differ, which is why the stage of your deal matters more than anything.

Pre-shipment vs post-shipment at a glance

Many exporters use both: packing credit to produce the order, then factoring or LC discounting to get paid quickly after shipment.

Pre-shipment finance: packing credit

Packing credit is the standard pre-shipment facility. It funds raw materials, processing, packaging and transport-to-port for a confirmed export order, and is repaid from export proceeds after shipment.

It is the right tool when your bottleneck is production cash, not waiting for payment. Full mechanics in our export packing credit guide.

Post-shipment finance

Once the goods are on the water, four products compete for your working capital, and the buyer’s country decides which is available:

• Export factoring — sell invoices for an immediate advance in high-coverage markets. See how it works.
• LC discounting — borrow against an irrevocable LC before maturity, ideal for thin factoring markets. Full guide here.
• Bill discounting — cash against an accepted trade bill for a single shipment.
• Forfaiting — sell medium-term receivables (1–5 years) without recourse, built for capital goods.

Our product comparison unpacks the differences side by side.

How to choose

• Need cash to produce or pack the order? → Packing credit (pre-shipment).
• Shipped on open account to a broad-coverage country? → Export factoring.
• Shipped under an LC and want cash before maturity? → LC discounting.
• Capital goods or project exports with long payment terms? → Forfaiting.
• Unsure what your buyer’s country supports? → Run the country check first.

When the buyer’s country is the deciding factor, the trad financing matrix shows which product is available for 194 markets in seconds.

Common export financing scenarios

• A garment exporter with a 45-day open-account order to Germany: packing credit funds production, then factoring converts the invoice into cash after shipment.
• An engineering exporter selling heavy machinery to a South-East Asian buyer on a 180-day LC: packing credit for production, LC discounting after shipment to avoid the six-month wait.
• A trading company moving a one-off consignment to a buyer in a selective-coverage market: bill discounting against the accepted bill, without the infrastructure factoring would need.

Every scenario follows the same logic: match the stage of the deal to the product, and let the buyer’s country pick between factoring and LC discounting when you get to post-shipment.

Export financing in India: regulations & documents

Export credit in India is a regulated activity: banks and registered factors operate under RBI master directions, with TReDS providing a regulated discounting marketplace for MSME receivables. UCP 600 governs documentary credits, and FEDAI sets pricing conventions.

Financed or not, your export proceeds still have to be realised and reported under RBI’s EDPMS, with your e-BRC or FIRA as proof of realisation. Financing changes when you get paid — not your compliance obligations.

Frequently asked questions