It is a well-known fact that exporters play a significant role in the economic growth of a country by bringing in much needed foreign exchange and thus helping the nation reduce its current account deficit.
However, as exports entails sending goods to unknown buyers in foreign lands exporters need to also be cautious in making sure their payments are duly secured in the transaction.
This is where ECGC (formerly known as Export Credit guarantee corporation of India Ltd.) has been playing a paramount role.
A government of India initiative, ECGC was set up in 1957 with the objective of promoting exports from the country by providing Credit Risk Insurance and related services for exports.
‘The penetration of insurance cover for export goods in India is still very low. Many MSME exporters don’t realise the true necessity for being covered as most of them are solely operating on the basis of trust’ noted Mr CNA Anbarasan, Executive Director (Operations), ECGC speaking exclusively to Vizag Industrial Scan.
It is estimated that about 30-40% of the total exports done from India are eligible for insurance cover albeit only 20% of this is covered by ECGC.
‘Small exporters need to take cognisance of the fact that even if the default risk might be low there is a sizeable probability of insolvency risk’ said Mr Anbarasan.
However, with the COVID-19 pandemic and the Ukraine war exporters are now realising the need for adequately insuring their shipments.
Albeit premiums on insurance cover are decided on a few factors such as country classifications, payment terms etc. ECGC claims to have the lowest insurance rates in the country (i.e. per Rs 100). In addition it provides insurance cover to nearly all countries thereby securing Indian exporters.
‘We provide insurance cover to all the 227 countries including countries like Russia, Sri Lanka, Egypt etc.’ said the Executive director operations.
As most of the exports from India are bound to the USA, Europe, Middle East claims too are more from these countries just because of the sheer volume of exports to these regions.
MSME exporters can also avail of a ECGC scheme wherein they can be eligible for certain subsidies on the premiums they pay. It is informed that the government will reimburse premium payments up to Rs Ten thousand for MSME exporters.
Simulatenously the executive director informed that ECGC is looking at an IPO some-time next year. Mr Subhash Chahar, regional manager, ECGC and Mr Amlendu Bipul Mishra, branch manager, ECGC, Visakhapatnam also accompanied the ED in the interview