Financial Daily from THE HINDU group of publications
Thursday, Jul 25, 2002
Financial Daily from THE HINDU group of publications Thursday, Jul 25, 2002 |
|
|
|
|
|
Industry & Economy
-
Exports & Imports New ECGC cover to ease LC discrepancy woes Poornima Mohandas
MUMBAI, July 24 EXPORTERS need no longer worry about the arm-twisting tactics of foreign buyers who reject their orders sighting `Letter of Credit (LC) discrepancies' as a pretext. The Export Credit Guarantee Corporation of India (ECGC) is now offering cover to exporters for losses due to `LC discrepancies' as an offshoot of their existing `LC Comprehensive Risks' policy charging no extra premium. `LC discrepancies' are variations that may occur between the contents of LC issued by the opening bank for the foreign buyer and the bill of lading and similar documents. According to exporters, when the market turns unfavourable, the overseas buyer resorts to this ruse. "The foreign buyer identifies a redundant comma, an `i' instead of an `o', `Bombay' in place of `Mumbai' etc., in the documents and uses it as an excuse to reject the order or claim discounts,'' said Mr P.D. Patodia, President, Federation of Indian Exporters' Organisation. This situation causes loss to the exporter who finds his goods stranded and has to find an alternative buyer. LC discrepancies were also used as a weapon when the buyer had a surplus inventory or his/her plans went sour, said Mr Siddharth Rajagopal, Executive Director, Cotton Textile Export Promotion Council. Rejection woes will soon come to a stop with the new cover in place. Previously the `LC Comprehensive Risks' policy offered cover only for political problems in the foreign country and for commercial risks faced due to failure/closure of the LC opening bank. Exporters contend that there is a huge market for this product. New India Assurance Co., the only other credit insurer to exporters in India, may also launch a similar product if the market responses are positive. "There are at present over 13,000 holders for this policy which is expected to increase with the new cover,'' said the official. The policy ensures up to 25 per cent of the invoice value.
Send this article to Friends by E-Mail
|
Stories in this Section |
|
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line
|