Cover for exports
New Delhi: The government has decided to infuse Rs 3,000 crore, which will be used to provide insurance cover for shipments, to help small and medium enterprises find new markets.
"The government has decided on capital infusion of Rs 2,000 crore to the Export Credit Guarantee Corporation (ECGC) to enhance insurance coverage to exports by micro, small and medium enterprises and has also approved contribution of grant-in-aid (corpus) of Rs 1,040 crore to the National Export Insurance Account Trust (NEIA) to promote project exports," finance minister Piyush Goyal said after a cabinet meeting on Wednesday.
Funds to the ECGC will be infused in three fiscal years - Rs 50 crore for 2017-18, Rs 1,450 crore for 2018-19 and Rs 500 crore for 2019-20.
"The infusion will enhance insurance coverage to MSME exports and strengthen India's exports to emerging and challenging markets such as Africa, CIS (Commonwealth of Independent States) and Latin American countries," an official statement said.
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 to help exporters gain a stronger foothold in the difficult markets," it said.
Covers from the corporation will help in improving the competitive position of India exporters in international markets. "More than 85 per cent of customers who benefit from ECGC's covers are MSMEs. ECGC covers exports to around 200 countries in the world," it said.
Federation of Indian Export Organisations (FIEO) president Ganesh Gupta said despite increasing global protectionism, exports would continue to register healthy growth rates.