NEW DELHI: The government of India (GoI) on Wednesday approved capital infusion of Rs 2,000 crore to Export Credit Guarantee Corporation (ECGC) to enhance insurance coverage to micro, small medium enterprises exports.
It has also approved contribution of grant-in-aid (corpus) of Rs 1,040 crore to National Export Insurance Account Trust (NEIA) to promote project exports.
The decision for both was taken by the Cabinet Committee on Economic Affairs, chaired by Indian Prime Minister Narendra Modi.
Funds to ECGC would be infused in the three financial years — Rs 50 crore in 2017-18, Rs 1,450 crore in 2018-19 and Rs 500 crore for 2019-20.
“The infusion would enhance insurance coverage to MSME exports and strengthen India’s exports to emerging and challenging markets like Africa, CIS (Commonwealth of Independent States) and Latin American countries,” an official statement said.
It said that with enhanced capital, ECGC’s underwriting capacity and risk to capital ratio will improve considerably.
“With a stronger underwriting capacity, ECGC will be in a better position to support Indian exporters to tap new and unexplored markets. Increased capital infusion will help ECGC to diversify its product portfolio and provide cost effective credit insurance helping exporters to gain a stronger foothold in the difficult markets,” it added.
Covers from the corporation will help in improving competitive position of India exporters in international markets.
“More than 85 per cent of customers benefitted by ECGC’s covers are MSMEs. ECGC covers exports to around 200 countries in the world,” it added.
ECGC offers credit insurance schemes to exporters to protect them against losses due to non-payment of export dues by overseas buyers due to political and/or commercial risks.
Further to promote project exports from the country, the government of India has approved additional grant to NEIA.
The corpus is to be utilised during three years from 2017-18 to 2019-20.
“An amount of Rs 440 crore has already been received for the year 2017-18. Rs 300 crore each will be given to NEIA for the years 2018-19 and 2019-20,” the statement said.
It would strengthen NEIA to support project exports from the country that are of strategic and national importance, it added.
India’s exports grew by 9.78 per cent to USD 302.84 billion in 2017-18.