Cabinet approves listing of ECGC
The government will infuse ₹4,400 crore in the ECGC over a period of five years
NEW DELHI: The Union Cabinet on Wednesday approved capital infusion of ₹4,400 crore in the state-owned Export Credit Guarantee Corporation (ECGC) and its listing through an initial public offering.
The government will inject ₹4,400 crore in the ECGC over a period of five years beginning 2021-22, said commerce minister Piyush Goyal told reporters after the Cabinet meeting.
He also said ₹500 crore infusion will be done immediately. The listing of ECGC is likely to happen next year.
Goyal said in the past one year, a special focus has been given to exports. “PM Modi has given us a target to make a big leap in exports,” said Goyal.
He said as of September 21, the country has exported goods worth $185 billion, which is the highest in the history of India in the first six months.
He added that when small businesses export, they want it to have insurance cover as well. “If, for some reason, payment does not come on time, ECGC will provide insurance cover.”
The Cabinet also approved continuation of the National Export Insurance Account (NEIA) scheme and infusion of ₹1,650 crore Grant-in-Aid over five years. Capital infusion in NEIA will help tap the huge potential of project exports in focus market.
As per Goyal, around 97 per cent of the industries are from MSME sectors.
“Today’s decision will provide direct benefit to MSMEs as they’ll be able to export on a bigger scale.”
ECGC was established to promote exports by providing credit insurance services to exporters against non- payment risks by the overseas buyers due to commercial and political reasons. It also provides insurance covers to banks against risks in export credit lending to the exporter borrowers.
Capital infusion in ECGC will enable it to expand its coverage to export-oriented industry particularly labour-intensive sectors.
ECGC is a market leader with around 85% market share in export credit insurance market in India.
Earlier this month, the Union Cabinet approved a ₹26,058 crore production linked incentive (PLI) scheme for auto, autocomponents and drone industries to enhance India’s manufacturing capabilities, Union minister Anurag Thakur said.
The PLI scheme will incentivise the emergence of advanced automotive technologies’ global supply chain in India.
Incentives worth ₹26,058 crore will be provided to industry over five years, the minister told reporters after the Cabinet meeting.
It is estimated that over a period of five years, the PLI scheme for the automobile and auto components industry will lead to fresh investment of over ₹42,500 crore, incremental production of over ₹2.3 lakh crore and will create additional employment opportunities of over 7.5 lakh jobs, Mr. Thakur said.
The PLI scheme for automobile and drone industries is part of the overall announcement of PLI schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of ₹1.97 lakh crore.
The scheme for the auto sector envisages overcoming the cost disabilities to the industry for the manufacture of advanced automotive technology products in India.
The incentive structure will encourage industry to make fresh investments for the indigenous global supply chain of Advanced Automotive Technology products, Mr. Thakur said.
The scheme for the auto sector is open to existing automotive companies as well as new investors who are currently not in automobile or auto component manufacturing business.