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The Union Cabinet has approved additional capital infusion of ₹4,400 crore into the ECGC Ltd--a body under the Commerce & Industry Ministry that provides export credit insurance support to exporters—for a period of five years.
The government will also soon begin the listing process of ECGC in the stock market so that funds can be raised from the market too, Commerce & Industry Minister Piyush Goyal said at a media briefing following the Cabinet meeting on Wednesday.
NEIA scheme
The cabinet also approved continuation of the National Export Insurance Account (NEIA) scheme and infusion of ₹1,650 crore grant-in-aid over five years.
Capital infusion and planned IPO is expected to increase ECGC’s underwriting capacity up to ₹88,000 crore and propel additional exports of ₹ 5.28 lakh crore over a five-year period, Goyal added. The listing process is likely to be complete during the next fiscal, he said.
The approved amount will be infused in instalments, with ₹500 crore released immediately and another ₹500 crore in the next fiscal, the Minister pointed out. “The release of additional money will be need-based,” Goyal said, adding that there will be an option of raising it from the market or earmarking it from the approved kitty of ₹ 4,400 crore.
Also read: Increasing ECGC cover will benefit the sector: Exporters
ECGC 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. It also provides insurance covers to banks against risks in export credit lending to the exporter borrowers.
Capital infusion in NEIA Trust will help tap the huge potential of project exports in focus market, the Minister said. NEIA is now likely to support project exports worth up to ₹33,000 crore and help create 2.6 lakh new jobs, including around 12,000 ones in formal sector.
Goyal said that India had achieved goods exports worth $185 billion till September 21 in the ongoing fiscal, which was the highest ever for the time period.
Capital infusion in the ECGC scheme would directly benefit MSME exporters as 95 per cent of the exporters covered are from the sector. “ECGC has 85 per cent share in the export credit insurance market. As much as 28 per cent of the country’s goods exports is covered by it. This share is expected to go up now and more MSMEs are likely to benefit,” an official told BusinessLine .
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