Cabinet okays ₹4,400 cr capital infusion in ECGC

NEW DELHI: The cabinet on Wednesday approved capital infusion of ₹4,400 crore in ECGC Ltd (erstwhile Export Credit Guarantee Corporation of India Ltd) in five years starting from 2021-22, and decided to list the state-run export credit insurance provider through an initial public offering (IPO).

Speaking about the cabinet decision, commerce and industry minister Piyush Goyal said, “I expect that it would be listed by the next financial year.”

The approved amount will be infused in instalments thereby increasing the capacity to underwrite risks up to ₹88,000 crore and this will enable ECGC to issue covers that can support additional exports of ₹5.28 lakh crore over the five-year period, he said. He also said that the IPO would hit the market during the next financial year.

Goyal said₹500 crore will be infused in the ECGC immediately and another ₹500 crore in the next financial year. The rest would be need based.

ECGC was established by the government under the Companies Act to promote exports by providing credit insurance services to exporters against nonpayment risks by the overseas buyers.

It also provides insurance covers to banks against risks in export credit lending to the exporter borrowers.

Citing a report published by the World Bank and the International Labour Organisation, an official statement said the move would result into formalisation of 2.6 lakh workers and total number of workers—both formal and informal—would increase by 59 lakhs.

ECGC has around 85% share in export credit insurance market in India. It supports exports worth ₹6.02 lakh crore in 2020-21, which is around 28% of India’s merchandise exports and has settled claims of over ₹7,500 crore in the last decade, the statement said.