Government to extend foreign currency loans to Exporters
23, Jun 2019
Prelims level : International Economy Mains level : GS3A - Indian Economy and Issues relating to Planning, Mobilization of Resources, Growth, Development and employment
- India is a net importer of commodities.
- This impacts India’s balance of payments, hence the country needs to strengthen its exports. In order to boost exports, the government has subsidized several trade related issues. However, such steps have been inadequate. Moreover, they have burdened the exchequer.
- Hence the government now plans to enhance foreign currency loans by working with bankers. The government has decided to enhance the role of Export Credit Guarantee Corporation of India as an agency for exporters.
What is Export Credit Guarantee Corporation of India?
- ECGC Ltd. (Formerly known as Export Credit Guarantee Corporation of India Ltd.) wholly owned by Government of India, was set up in 1957.
- It was set up with the objective of promoting exports from the country by providing credit risk insurance and related services for exports.
- ECGC is essentially an export promotion organization, seeking to improve the competitiveness of the Indian exports by providing them with credit insurance covers.
- The Corporation has introduced various export credit insurance schemes to meet the requirements of commercial banks extending export credit. The insurance covers enable the banks to extend timely and adequate export credit facilities to the exporters.
- A range of insurance covers to Indian exporters against the risk of non – realization of export proceeds due to commercial or political risks
- Different types of credit insurance covers to banks and other financial institutions to enable them to extend credit facilities to exporters and
- Export Factoring facility for MSME sector which is a package of financial products consisting of working capital financing, credit risk protection, maintenance of sales ledger and collection of export receivables from the buyer located in overseas