ECGC Ltd, formerly known as Export Credit Guarantee Corporation of India Ltd, last week introduced a new scheme which is likely to benefit the exporter community, particularly small exporters. The organisation -- which provides credit risk insurance and related services-- extended support worth Rs.6.18 lakh crore to exporters in the last financial year, and the launch of the new scheme, which will increase the insurance cover to the extent of 90% for small exporters, is no doubt a welcome move.

The new benefits will be available under the ‘Export Credit Insurance for Banks Whole Turnover Packaging Credit and Post Shipment’. In an official release, the Commerce Ministry said that “the enhanced cover shall be available for manufacturer- exporters availing fund-based export credit working capital limit up to Rs 20 crore (i.e., total Packaging Credit and Post Shipment limit per exporter/exporter-group) excluding the Gems,  Jewellery & Diamond sector and merchant exporters/traders”.

The Ministry added that as a result of this new scheme, banks which hold ECGC’s WT-ECIB cover, will be able to “explore the possibility of reducing interest rates further” and this, in turn, will benefit all stakeholders. In other words, due to introduction of the scheme, more small exporters will come forward for bank credit and as a result, we may expect banks to provide more concessions, including lower rate of interest, to small exporters. This sounds encouraging.

These days, costs of exports have risen significantly as a result of lack of availability of ships due to the ongoing Russia-Ukraine crisis. In the background of this, the new scheme will certainly be a relief to our small exporters. Meanwhile, the next meeting of the RBI monetary committee is scheduled to be held during August 3-5, and according to some economy watchers, this time the central bank may take a bit softer stance, considering the receding risks of inflation.