NEW DELHI, November 17: The India Brand Equity Fund (IBEF)trust is considering limiting its funding to one-third of the project cost for brand promotion abroad, with the remaining amount being put in by the concerned promoters and any additional funds coming from other lenders.

This will form part of the list of investment guidelines for the fund being finalised by the trust. The trust has also decided that the initial corpus of Rs 50 crore granted as budgetary support this year will remain untouched. The fund will use 25 per cent of other funds accruing to the corpus every year, for lending to exporters.

The fund will get contributions from the budget, premium on special import licenses and contributions from private industry. That means that the fund will have at its disposal the premium on SIL plus the interest from banks for lending to brand promotions. The trust now has a corpus of Rs 89 crore - Rs 50 crore budgetary support, Rs 34 crore collected as premium on SIL and an interest payment of Rs 5 crore. Therefore, the fund will invest 25 per cent of the Rs 34 crore and Rs 5 crore interest put together for two years - that is, Rs 10 crore a year on brand promotions. The amount will go up as the collections go up. The loans to exporters will be granted for periods of 5 to seven years. The objective is to give the exporters access to long term credit for advertising and promoting their brands as Indian brands.

The trust will also consider roping in banks to provide credit to the exporters. The guidelines are expected to kick off the fund which has been delayed by the indifference of private sector. When the fund was set up last year it was expected that private industry would contribute the same amount to the corpus as the government. Till date, however, industry has made no attempt to contribute to the fund. The trust has already identified the `Nargis' brand of tea as its first promotion project in the overseas market, particularly in the Commonwealth of Independent states. The Nargis brand of tea has been promoted by a consortium of six leading tea companies including Tata Tea, Goodricke for promotion given the falling tea exports last year. In 1996-97 tea exports fell by around 70 per cent and Sri Lanka overtook Indian exports. The promotion of the Indian brand is expected to help tea exporters recover.

The fund has issued letter of intent to the promoters and is now awaiting their response. In the case of Nargis the fund has agreed to lend Rs 2 crore for initial promotion efforts.

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