Export Credit Guarantee Corporation (ECGC):
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.
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.