Economics Prelims cum Mains

Cabinet okays ₹2,000-cr. capital infusion for export guarantor across FY2017-20

The  News

  • The Cabinet Committee on Economic Affairs (CCEA) approved a capital infusion of Rs. 2,000 crore into the Export Credit Guarantee Corporation (ECGC) to be infused over the three financial years 2017-20.
  • The CCEA also approved the contribution of grant-in-aid of Rs. 1,040 crore to the National Export Insurance Account Trust (NEIA).

 

News summary

About Export Credit Guarantee Corporation (ECGC)

  • ECGC is a premier export credit agency of the Government of India to provide Export Credit Insurance Services to facilitate exports from the country.
  • The ECGC offers credit insurance schemes to exporters to protect them against losses due to non-payment of export dues by overseas buyers due to political and / or commercial risks.
  • More than 85% of customers benefitted by ECGC’s covers are MSMEs.
  • ECGC covers exports to around 200 countries in the world.

 

Benefits from infusion

  • The infusion would enhance insurance coverage to MSME exports and strengthen India’s exports to emerging and challenging markets like Africa, CIS and Latin American countries.
  • 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 helping exporters to gain a stronger foothold in the difficult markets.
  • Covers from ECGC will help in improving competitive positon of India exporters in International markets.

 

NEIA and benefits from infusion

  • National Export Insurance Account (NEIA) is a fund set up in 2006 with an approved corpus of Rs. 2000 Crore as a Public Trust by the Ministry of Commerce and Industry to promote project exports from India.
  • NEIA also supports projects exports which have long credit period for repayment and which are beyond the underwriting capacity of the Export Credit Guarantee Corporation (ECGC).
  • The infusion of corpus would strengthen NEIA to support project exports from the country that are of strategic and national importance.

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