North Block nod for Rs 2000 cr exports insurance fund

The Union finance ministry has given the go-ahead for a Rs 2,000 crore national exports insurance fund (NEIF) that would help Export Credit Guarantee Corporation of India (ECGC) to provide risk cover to large medium and long-term projects by Indian investors abroad.

The fund will facilitate credit insurance support on government account.

An amount of Rs 600 crore would be provided by the government during the current plan period and another Rs 1,400 crore would be made available over the next plan period, ECGC chairman P K Dash said at the announcement of a partnership between World Bank's Multilateral Investment Guarantee Agency, ECGC and Export-Import Bank of India.

The need for such a fund was felt in view of the increasing number of projects in the oil, services and information technology sectors being undertaken by Indian companies in foreign countries. Dash said the fund will help ECGC support big ticket investments abroad.

ECGC will operate the NEIF on behalf of the government. The government will bear 80 per cent of the risk covered under the fund and the remaining 20 per cent by ECGC. ECGC provides risk cover of up to $10 million per project.

ECGC has also got approval from The Insurance Regulatory and Development Authority of India (IRDA) for its risk cover plan for software exports. The risk covered would related to intellectual property rights, visa and other political risks, ECGC General Manger Geetha Muralidhar said.

ECGC also plans to further reduce its risk premium by upgrading the risk profile of some countries during its next periodic revision. ECGC had recently reduced its premium rates for medium as well as long-term contracts. It is also initiating a facility to pay premium in instalments without charging any interest.

The government also considering increasing the capital base of ECGC so as to enhance its underwriting capacity.