In a big boost to the export, the Indian Government has decided to extend the Emergency Credit Line Guarantee Scheme (ECLGS) till 31 March 2022 and to infuse capital in Export Credit Guarantee Corporation (ECGC).
The Union Cabinet cleared a proposal to list state-owned ECGC Ltd. through the Initial Public Offer (IPO).
It also approved capital infusion of Rs. 4,400 crore in ECGC and its listing through an initial public offering saying it will help boost exports from the country. Capital infusion in ECGC and its listing will strengthen the corporation to serve more exporters wanting insurance cover for their sale on credit.
The company intends to increase its maximum liabilities (ML) to Rs. 2.03 lakh crore from Rs. 1 lakh crore by 2025-26. The planned capital infusion and IPO will increase ECGC’s underwriting capacity up to Rs. 88,000 crore and propel additional exports of Rs 5.28 lakh crore over a five-year period.
After the Cabinet meeting that was chaired by Prime Minister Narendra Modi, Commerce and Industry, Textiles Minister Piyush Goyal shared the details about the decision.
The Minister said that the ECGC could be listed on the stock exchanges by next fiscal year. The move will help create 59 lakh new jobs including 2.6 lakh in the formal sector.
The Ministry of Finance extended the ECLGS till 31 March 2022 or till guarantees for an amount of Rs 4.5 lakh crore are issued under the scheme, whichever is earlier. It also made other modifications to ensure that businesses adversely impacted by the second wave of COVID-19 get enhanced collateral free liquidity.
The Cabinet has also given its nod to infuse Rs. 1,650 crore in National Export Insurance Account (NEIA) scheme.
A. Sakthivel, Chairman, Apparel Export Promotion Council (AEPC) welcomed the Government’s decisions and said that these decisions along with the recent measures will ease realisation of US $ 400 billion export target.
“We are extremely thankful to the Government for accepting our request to continue the ECLGS for a longer period. This is a very timely help as many of the apparel exporters are still facing acute fund shortage,” he said.
A large section of the exporters, particularly the apparel exporters, are micro, small and medium enterprises (MSMEs) and they were badly impacted due to the pandemic. This scheme is helping many MSMEs to get back to business.
“And, as many exporters are MSMEs, labour-intensive and they certainly need cover for the risk involved in international trade, the decision to financially strengthen the ECGC will have a big impact on employment generation in a short period,” the Chairman said.
