The Union Cabinet sanctioned a capital infusion of Rs. 4,440 crores in the ECGC (Export Credit Guarantee Corporation).
Traders were expecting some sort of financial support due to the current high freight rates and the shortage of containers. The government’s announcement will come as some relief for the exporters. Especially for the small enterprises.
There will be a larger capital infusion into the ECGC and NEI schemes of the government of India.
The cabinet also cleared a proposal to list state-owned Export Credit Guarantee Corporation through IPO.
From 2021, continuously for 5 years, the government will inject ₹4,400 crores in the ECGC. 500 crores rupees will be given this fiscal year. 500 crores will be given in the next fiscal year. After that money will be provided based on the needs.
NEIA (National Export Insurance Account) scheme will be continued. Over five years 1,650 crores of rupees will be infused. The government intends to give confidence to small exporters with insurance support and to give a push to the MSMEs. 97 percent of the policyholders are MSME players. NEIA also supports Project Finance. So, the 33,000 crores rupees worth Project Finance can be ensured through that medium.
The government has extended the emergency credit line guarantee scheme till March 2022. It has also expanded the scope of the scheme for borrowers under the ECGC. One and two can avail an additional credit of 10 percent apart from the 20 percent limit set earlier. As of the 24th of September, the loan sanctioned under the scheme stands at 2.86 lakh crore rupees.
Collectively these steps will help the Indian exports to grow further in the coming months. This is also likely to generate employment opportunities in the formal and informal sectors. This will give a thrust to the exporters and also boost the ecosystem surrounding it (Trucks, Hotels, etc.)
ECGC is an export-promoting organization owned by the Union Government. The Ministry of Commerce and Industry pulls its strings. It is headquartered in Mumbai.
- ECGC boosts the competitiveness of Indian exports.
- It protects against the non-payment by an importer.
- It provides export credit insurance to the exporter.
- It guides activities related to export.
- It provides information regarding different countries with their credit ratings.
- It assists exporters in recovering bad debts.
- It provides information regarding the creditworthiness of overseas buyers.
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