ECGC to focus on medium, long term project exports under NEIA scheme
Mumbai, Mar 24 (UNI) With the government of India approving the National Export Insurance Account (NEIA), the Export Credit Guarantee Corporation of India Limited (ECGC) will now start focusing strongly on medium-and-long-term credit insurance cover to exporters, especially project exporters.
ECGC chairman and managing director C L Fernandez said that the NEIA, for which the government has set up a corpus of Rs 2,000-crore through the course of the Eleventh Plan, will be maintained and operated through a Trust which will be registered early next week.
''Out of this corpus, Rs 66-crore has been allocated for this year and Rs 180-crore for the next year,'' said Mr Fernandez, adding that the remaining sum will be made available during the Eleventh Plan.
A significant highlight of the NEIA is that ECGC can provide cover up to ten times the corpus amount which means that in the first year itself, it can do business of Rs 660-crore.
''So far ECGC has been servicing only short-term exports up to five years, but now we can cover up to ten years and beyond,'' Mr Fernandez said.
The corpus money for the NEIA is a part of the budgetary allocation from the government.
The criteria for availing of NEIA cover is that the project should be commercially viable and be in the nature of either medium or long term exports, it should be of national importance and in a case where reinsurance is not available.
Mr Fernandez said that reinsurance availability was proving a major problem thus far as ''reinsurers are shy of entering into long-term transactions because of the higher risk element inherent in them.'' But now with the NEIA coming into existence, this problem would be addressed.
The NEIA will cover all medium-and-long-term project exports involving civil constructions, turnkey projects, supply of equipments, services and investments in overseas joint ventures as also those transactions in the nature of a buyer's credit, line of credit, supplier's credit and those involving deferred terms of payments.
''Six projects are presently under consideration under the NEIA, three of them actively,'' revealed Mr Fernandez, adding that all proposals would be placed before the Committee of Directions (CoD) which would be chaired by the secretary, ministry of commerce.
high-level representatives from the RBI, Exim Bank and department of economic affairs, ministry of external affairs and the joint secretary of the ministry of commerce will comprise the CoD, he said, adding that the CMD of ECGC will also be a member of this committee.
Highlighting the fact that the premium under the NEIA will not be subsidised as it otherwise would violate WTO norms, Mr Fernandez said that engineering and construction-related sectors can benefit from this scheme.
''Our focus areas will be project exports to the Middle-East and African countries,'' the ECGC chief said adding, ''though the risk level is higher in these regions, we have the competence to deal in them.'' He expected a 20 per cent growth in project exports, which presently stand at USD 445 million, in the short-term.
''The scheme will facilitate not only exports but will also provide a level-playing field to Indian exporters in the global project export market, he said.
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