Govt approves Rs 4,400 Cr investment in ECGC to boost exports
This investment, along with ECGC's IPO slated in the coming times, is expected to increase its capacity to underwrite risks up to Rs 88,000 crore.
In a bid to boost exports in the country, the central government has approved capital infusion of Rs 4,400 crore to ECGC Limited (formerly known as Export Credit Guarantee Corporation of India Ltd) for a period of five years, from FY22 to FY26.
The investment, along with ECGC's IPO slated in the coming times, are expected to increase its capacity to underwrite risks up to Rs 88,000 crore and enable the ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore over the five-year period.
This will also help in generating 59 lakh news jobs, including 2.6 lakh in the formal sector.
The ECGC was established by the Indian government in 1957 to promote exports by providing credit insurance services to exporters against non-payment risks by overseas buyers due to commercial and political reasons.
Over the last few years, the government launched several initiatives to promote exports and overseas trade, which is a major generator of revenue for the Indian economy.
It has launched schemes such as Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme, and Transport and Marketing Assistance (TMA) to promote trade infrastructure and marketing, and also identified various districts with products that have export potential and further promoted these districts as export hubs.
COVID-19, which brought the entire world to a standstill, impacted the country's economic growth. The micro, small and medium enterprises (MSMEs) contribute about 48 percent to exports. The pandemic-led lockdowns and the disruption of global supply chains further added to the woes of the sector.
From textiles to automobiles, small businesses have reported at least 30 percent decrease in revenues. ECGC's role in the labour-intensive sectors has particularly encouraged banking to expand its lending capacities to small businesses, and thus accelerating their survival.
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Edited by Kanishk Singh
