Mumbai, Sept 30:
The government's decision to infuse Rs 4,400 crore in state-owned credit insurance provider ECGC Ltd and its listing through an initial public offering, expected in next 18 months, will increase the company's underwriting capacity significantly, said M Senthilnathan,its Chairman and Managing Director on Thursday.
The Cabinet on Wednesday approved the Rs 4,400-crore capital infusion to ECGC Ltd over five years (FY2021-22 to FY2025-26).
The government also approved the continuation of the National Export Insurance Account (NEIA) scheme and an infusion of Rs 1,650 crore grant-in-aid over five years.
The approved amount will be infused in instalments, thereby increasing the capacity to underwrite risks up to Rs 88,000 crore and this will enable ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore over the five-year period, he said.
''This will help ECGC provide an insurance cover to around 25,000 exporters from the current level of 12,000 exporters, most of which are small exporters,'' he said.
This will also enable ECGC to diversify its product portfolio and provide cost effective credit insurance helping exporters to gain a stronger foothold in the difficult markets.
Currently, ECGC provides coves to 239 countries across the globe and the capital infusion will help in improving the competitive position of Indian exporters in the international markets.
ECGC Ltd is a wholly-owned central public sector enterprise (CPSE) set up to improve the competitiveness of exports by providing credit risk insurance and related services for exports.In addition to its basket of export credit insurance covers, ECGC also offers factoring facility for small exporters without recourse with 100% credit risk protection on the buyer on Short-Term (ST) export transactions only.
Senthilnathan said the capital infusion in ECGC will enable it to expand its coverage to export-oriented industry particularly the labour-intensive sector.
The capital will also enable ECGC to diversify its product portfolio and provide cost-effective credit insurance helping exporters to gain a stronger foothold in the difficult markets, he said.
Currently, ECGC provides cover to 239 countries across the globe and the capital infusion will help in improving the competitive position of Indian exporters in the international markets.
Senthilnathan said the government will also provide a grant-in-aid of Rs 1,650 crore to NEIA Trust, which will increase its underwriting capacity by Rs 33,000 crore. It will also support an estimated output of Indian manufactured goods to the tune of Rs 25,000 crore.
ECGC has an office at the Gift City, Gujarat. Given its strategic location and the business opportunities there, we have already started issue of export credit insurance covers in foreign currency. Once permitted, we will expand covers in foreign currency to exporters outside SEZs as well, said Senthilnathan. .
ECGC is also in the process of increasing our engagements with the alternate channels, such as the brokers, to increase the business.
“Given our existing service network across the country and the limitations in expanding it, their involvement is going to play an important role in offering last mile coverage of export credit insurance covers to exporters, especially those from the MSME segment and located in far flung places,'' said ECGC CMD..