New Delhi: The Government today approved capital infusion of ₹4,400 crore to ECGC Ltd. (formerly known as Export Credit Guarantee Corporation of India Ltd.) over a period of five years, from FY 2021-2022 to FY 2025- 2026. The approved infusion along with efforts made to suitably synchronize with the listing process of ECGC through the Initial Public Offering will increase the underwriting capacity of ECGC to support more exports.
Government today also approved capital infusion of of ₹1,650 Crore to National Export Insurance Account (NEIA) over a period of five years, i.e. from FY 2021-2022 to FY 2025-2026. Established in 2006 to promote Medium and Long Term project exports from India, the NEIA Trust extends support to covers issued by ECGC Ltd to MLT project exports and to Exim Bank for Buyer’s Credit (BC-NEIA) tied to project exports from India.
ECGC, which was established by the Government of India under Companies Act in 1957 to promote exports by providing credit insurance services to exporters against non- payment risks by the overseas buyers due to commercial and political reasons, also provides insurance covers to banks against risks in export credit lending to the exporter borrowers. It endeavours to support the Indian export industry with its experience, expertise and underlying commitment to progress and advance of India’s exports. It is a market leader with around 85% market share in export credit insurance market in India.
Export supported by ECGC was Rs.6.02 lakh crore in 2020-21, which is around 28% of India’s merchandise exports. It insures around 50% of total export credit disbursement by banks, covering 22 banks (12 Public Sector Banks and 10 Private Sector Banks), and also has a database of over five lakh overseas buyers. It plays a wider role in supporting exports from labour-intensive sectors and encourage bank lending to enterprises of small exporters thereby leading to their revival.
The Ministry of Commerce & Industry stated that capital infusion in ECGC will enable it to expand its coverage to export oriented industry particularly labour-intensive sectors. The approved amount will be infused in instalments thereby increasing the capacity to underwrite risks up to ₹88,000 crore and this will enable ECGC to issue covers that can support additional exports of ₹5.28 lakh crore over the five-year period in line with the existing pattern.
In addition, in terms of the report ‘Export to Jobs’ published by World Bank and International Labour Organisation in February 2019, ₹5.28 lakh crore exports will lead to formalization of 2.6 lakh workers. Further, the total number of workers (both formal and informal) will increase by 59 lakhs as per the report.
– global bihari bureau
