India needs to look for new export markets: Nirmala Sitharaman
New Delhi, Nov 8 Commerce and Industry Minister Nirmala Sitharaman on Tuesday said that to boost exports, India needs to look for newer markets like Africa or Latin America for which ECGC, the government company which ensures sustained flow of exports, will have to support the exporters.
"We have to look for newer markets which may be in Africa or in Latin America and it is for ECGC to stand by the exporters to assure them that they are not going to face any risk," Sitharaman said here at the diamond jubilee celebrations of the government-owned company which provides export credit insurance support to the Indian exporters.
"ECGC's (formerly known as Export Credit Guarantee Corporation of India) role is very vital in handholding exporters in these trying times because exports have seen a continuous decline over several months," she added.
Small and Medium Enterprises (SMEs) contribute a major chunk of exporters who receive the support from ECGC. Engineering goods, chemicals, drugs and pharmaceuticals, textiles, garments, gem, jewellery, diamonds, leather products, carpets, sea foods and electronic goods account for a substantial share of India's exports.
The developed countries account for a lion's share of India's export market. ECGC's role is crucial in sustaining the flow of export to the traditional markets like the US, Britain and EU.
"More than five decades of experience of ECGC in insuring and maintaining credit lines on lakhs of buyers in developed markets will be very vital in sustaining the flow of India's exports," she said.
It is of interest to note that around 90 per cent of world merchandise trade and services involve credit, guarantee or insurance.
She said that more than 90 per cent of India's merchandise exports are made on short term credit i.e. less than 360 days.
She said estimates by ADB (Asian Development Bank) Institute indicate that exports from India suffered due to unmet trade finance needs to the order of $300 billion approximately.
IMF estimates suggest that globally bank intermediated trade finance support around 40 per cent of merchandise trade.
"India's exports increased in the years subsequent to the global financial crisis due to the stabilising role played by ECGC in taking out the lending risks to exporters both at pre-shipment and post-shipment stage," she added.