The Hindu Business Line : New schemes for emerging export streams on anvil

ECGC Ltd is now in discussions with various trade organisations, software exporters as well as Nasscom (National Association of Software Companies) for providing big ticket export credit cover in new and challenging areas such as software exports.

Talking to newspersons, after chairing the corporation's Regional Advisory Committee meeting, Mr P.M.A. Hakeem, Chairman & Managing Director, ECGC, said there was a need for underwriting support to such new emerging export streams. There has to be built-in flexibility in these new instruments being developed by ECGC.

The corporation was now working on possible new areas of credit insurance business such as agri exports, software and project exports, quite aware that the present instruments in its fold were not suitable to exporters in these fields.

He pointed out that software exports was arguably the fastest growing in the country's export basket in recent times and had enormous potential. These would constitute some of the new products being worked upon by ECGC to increase the portfolio size. ECGC is likely to announce these products in a month or so.

Describing ECGC's premium rates as being the lowest among international credit insurers, Mr Hakeem said that reduction in rates have been effected for all terms of payment.

The No Claim Bonus (NCB) rates have been further liberalised - doubled from 5 per cent per renewal to 10 per cent. While earlier, a claim payment meant withdrawal of NCB, it is linked to the claim-premium ratio, where it is possible for exporters to continue to enjoy current NCB rates even after a claim is paid.

He said ECGC was now poised to record a 15 per cent jump in its premium earnings at Rs 425 crore for the current financial year, up from the Rs 375 crore for 2002-03. The premium target for 2004-05 is placed at Rs 500 crore. The claims payout in 2003-04 is expected to be around Rs 400 crore. He put the investment income for the current year at Rs 120 crore, down by Rs 10 crore from that in the previous year

ECGC's equity base is now at Rs 500 crore, up from the Rs 450 crore during 2002-03, and is set to touch a figure of Rs 800 crore by 2007 through a phased infusion of capital. He said around Rs 60 crore has already been received and another Rs 20 crore in the pipeline.

On the already announced National Export Insurance Fund by the government, for large exporters, he said modalities are being worked out.

Besides the new "Buyerwise Policy" introduced by ECGC, which took care of 80 per cent cover, Mr Hakeem said: "Specific Shipment" policy was an appropriate instrument of credit insurance for exporters, who seek cover on as elective basis. On the advantages here, he said under the `Whole Turnover' policy terms, an exporter had to cover all his shipments or not take cover at all, and this was irrespective of the risk perception for different buyers.

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