Listing of Export Credit Guarantee Corporation (ECGC)

• 30 Sep 2021

Why in News

Recently, the Union Cabinet has approved capital infusion in the Export Credit Guarantee Corporation (ECGC) and its listing through an initial public offering.

• The government will inject Rs 4,400 crore in the ECGC over a period of five years beginning 2021-22.
• The Cabinet also approved continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crore Grant-in-Aid over five years.

Key Points

• About the ECGC:
  
  • Establishment: The ECGC Ltd is wholly owned by the Ministry of Commerce and Industry.
    
    • The Government of India had initially set up the Export Risks Insurance Corporation in 1957.
    • After the introduction of insurance covers to banks during the period 1962-64, the name was changed to Export Credit & Guarantee Corporation Ltd in 1964.
    • It was changed to ECGC Ltd in August 2014.
  • Objectives: ECGC was established to promote exports by providing credit insurance services to exporters against non-payment risks by the overseas buyers due to commercial and political reasons.
  • Significance of Capital infusion: It will enable it to expand its coverage to export-oriented industries, particularly labour-intensive sectors.
    
    • ECGC is a market leader with around 85% market share in the export credit insurance market in India and provided support to exports worth Rs 6.02 lakh, or 28% of merchandise exports, in FY21.
    • Micro, Small and Medium Enterprises (MSMEs) form 97% of the client base of ECGC.
    • The process of listing ECGC on the stock market is also being initiated so that it can raise more funds.
• National Export Insurance Account (NEIA) Scheme:
  
  • NEIA Trust was established in 2006 to promote project exports from India that are of strategic and national importance.
  • It promotes Medium and Long Term (MLT)/project exports by extending (partial/full) support to covers issued by ECGC to MLT/project export.
  • Exim Bank, in April 2011, in conjunction with ECGC Ltd., introduced a new initiative, viz. Buyer’s Credit under the NEIA scheme, under which the Bank finances and facilitates project exports from India.

Recent Export Related Initiatives

• Foreign Trade Policy (2015-20): It aims at doubling the overseas sales to $900 billion by 2019-20 and making India global, while integrating the foreign trade with “Make in India” and “Digital India Programme”.
• Remission of Duties and Taxes and Exported Products (RoDTEP): It is a WTO compatible mechanism for reimbursement of taxes/ duties/ levies, which are currently not being refunded under any other mechanism, at the central, state and local level
• ROSCTL scheme: Support to textiles sector was increased by the remission of Central/ State taxes through the ROSCTL scheme, which has now been extended till March 2024.
• Certificate of Origin: Common Digital Platform for Certificate of Origin has been launched to facilitate trade and increase FTA (Free Trade Agreement) utilization by exporters.
• Agriculture Export Policy: A comprehensive policy to provide an impetus to agricultural exports related to agriculture, horticulture, animal husbandry, fisheries and food processing sectors, is under implementation
• NIRVIK Scheme: The ECGC has introduced the Export Credit Insurance Scheme (ECIS) called NIRVIK (Niryat Rin Vikas Yojana) to enhance loan availability and ease the lending process.
• Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme and Transport and Marketing Assistance (TMA) schemes to promote trade infrastructure and marketing.

Source: IE