The deal between EFIC and the State Bank of India is designed to make it easier for small to medium-sized enterprises with interests in the Indian market to secure the funds they need to export to and operate in India.

As a high-growth economy, India is an important export market for Australia.

Recent research by EFIC found India was the fourth most important export market for Australian SME exporters after China, Oceania-New Zealand and the rest of Asia.

Despite the opportunities available, Australian banks have cut their lending to India over the past year because of market turmoil.

Bank lending to India fell by more than 40% in the second half of 2013, according to data from the Bank for International Settlements.

In this climate of constrained bank lending it can be hard for Australian SME exporters to get the finance they need.

With this 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. These will include loans, guarantees, bonds and insurance products.

EFIC head of alliance and product Alex Fernandez said the collaboration would provide “much-needed support to SME exporters operating in India”

The State Bank of India is the largest domestic bank in India. It has a 22% share of the domestic Indian banking market and more than 17,000 branches in India.

Its majority shareholder is the Indian government.