The Cabinet Committee on Economic Affairs on Wednesday approved a capital infusion of Rs. 2,000 crore into the Export Credit Guarantee Corporation (ECGC) to be infused over the three financial years 2017-20.

The break-up of the infusion would be Rs. 50 crore in 2017-18, Rs. 1,450 crore in 2018-19, and Rs. 500 crore in 2019-20.

MSME exports

“The infusion would enhance insurance coverage to MSME exports and strengthen India’s exports to emerging and challenging markets like Africa, CIS and Latin American countries,” the government said in a release. “With enhanced capital, ECGC’s underwriting capacity and risk to capital ratio will improve considerably. With a stronger underwriting capacity, ECGC will be in a better position to support Indian exporters to tap new and unexplored markets.”

The increased capital infusion would also help ECGC to diversify its product portfolio and provide cost-effective credit insurance to exporters, the government said.

“Covers from ECGC will help in improving competitive position of India exporters in international markets,” the government said. “More than 85% of customers benefited by ECGC’s covers are MSMEs. ECGC covers exports to around 200 countries in the world.”

Separately, the Cabinet Committee on Economic Affairs also approved the contribution of grant-in-aid of Rs. 1,040 crore to the National Export Insurance Account Trust (NEIA). “The corpus is to be utilised during three years from 2017-18 to 2019-20,” the government said.

“An amount of Rs. 440 crore has already been received for the year 2017-18. Rs. 300 crore each will be given to NEIA for the years 2018-19 and 2019-20. The corpus would strengthen NEIA to support project exports from the country that are of strategic and national importance,” the Centre added.