Credit risk

ECGC launches new program to provide up to 90% export credit risk insurance coverage for small exporters

Trade, import and export for MSMEs: Export credit provider Export Credit Guarantee Corporation of India (ECGC) has launched a new scheme to insure up to 90% of credit risk in export finance, supporting small exporters by encouraging banks to provide more export credit in a context of global economic uncertainty. Risk coverage, provided by banks under the Export Credit Insurance for Banks (ECIB-WTPC&PS), will also enable small exporters to explore new markets and new buyers, and to diversify their existing product portfolio in a competitive manner, says the ECGC.

“We expect the coverage to play a decisive role,” ECGC chairman M Senthilnathan told a news conference on Tuesday. He added, “By granting 90% coverage to banks, we expect more small businesses to obtain export credits from banks, which will greatly benefit these industries. We expect banks to offer more concessions. The net effect will be the benefit for exporters, implying a reduction in interest rates.

Under this scheme, manufacturer-exporters will be able to obtain a fund-based export credit working capital limit of up to Rs 20 crore (total packing credit and post-shipment limit per exporter or group of producers). ‘exporters) excluding the sector of precious stones, jewelery and diamonds and merchant exporters or traders. The limit of working capital in the form of funds refers to cash credit, packaging credit, short-term loans, export and import financing, etc., from banks.

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According to ECGC, export credit support was Rs 6.18 lakh crore in FY22, with over 6,700 exporters benefiting from direct cover issued while over 9,000 exporters benefited from Export Credit Insurance for Banks (ECIB) as of March 31, 2022. About 96 percent of these beneficiaries were small exporters.

Meanwhile, the share of MSMEs in the country’s annual merchandise exports had declined despite India recording its highest exports ever, worth $421.8 billion over the past year. FY22. According to data on the value of MSME exports and their share in overall exports shared recently by Minister of State for MSMEs Bhanu Pratap Singh Verma in a written response to a question to Rajya Sabha, the share of exports of MSMEs fell to 45.04% in FY22 from 49.75% during FY20 and 49.35% during FY21.

However, overall MSME exports jumped 21.8% from $155.9 billion in FY20 and 31.9% from $143.9 billion in FY20. fiscal year 21 to $190 billion in fiscal year 22.