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.
The Union Cabinet on Wednesday approved capital infusion of Rs 4,400 crore in the state-owned Export Credit Guarantee Corporation (ECGC) and its listing through an initial public offering. The government will inject Rs 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 Rs 500 crore infusion will be done immediately. The listing of ECGC is likely to happen next year. The minister also informed that exports have totalled Rs 185 billion till September 21, 2021 in the current fiscal. The Cabinet also approved continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 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.
Capital infusion refers to the process whereby funds are injected into startup companies or ailing companies by an investor with a financial interest in the company. Capital infusion also refers to the process of transferring money from a successful unit, division or subsidiary of a company to another unit that is not doing well with the aim of injecting new life into that unit. This type of capital infusion applies to big organizations where the operations are split into different subsidiaries with their own stake in the company, all working toward the common goal of profitability for the organization.
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 per cent market share in export credit insurance market in India.