How the government is focusing on pushing exports of India - an update w.r.t. ECGC
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Coming to stock market - India's Export Credit Guarantee Corporation (ECGC)
- The story: A number of Indian PSUs are being privatised, and some are being listed on stock markets. The government took the decision to infuse fresh capital in the Export Credit Guarantee Corporation (ECGC) and list it through an initial public offering (IPO).
- How much capital: GoI inject Rs.4,400 crore in the ECGC, over a period of five years beginning 2021-22. The continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crore Grant-in-Aid over five years was also approved.
- What is the ECGC: The ECGC Ltd. is wholly owned by the Ministry of Commerce and Industry. It started as the Export Risks Insurance Corporation in 1957.
- After the introduction of insurance covers to banks during the period 1962-64, the name was changed to Export Credit & Guarantee Corporation Ltd in 1964. Later, it was changed to ECGC Ltd in August 2014.
- Goal - The 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.
- Why infuse fresh capital: This will enable it to expand its coverage to export-oriented industries, particularly labour-intensive sectors. The ECGC is a market leader with around 85% market share in the export credit insurance market in India and provided support to exports worth Rs 6.02 lakh, or 28% of merchandise exports, in FY21. The Micro, Small and Medium Enterprises (MSMEs) form 97% of the client base of ECGC. Listing the ECGC on the stock market is being initiated to enable it to raise fresh funds.
- National Export Insurance Account (NEIA) Scheme: The NEIA Trust was established in 2006 to promote project exports from India that are of strategic and national importance. It promotes Medium and Long Term (MLT)/project exports by extending (partial/full) support to covers issued by ECGC to MLT/project export. The Exim Bank, in April 2011, in conjunction with ECGC Ltd., introduced a new initiative, viz. Buyer’s Credit under the NEIA scheme, under which the Bank finances and facilitates project exports from India.
- Indian export schemes: The government is keen to push the annual merchandise exports beyond $400 billion, given the fact that the figure has stagnated at $300 b per annum approximatley for a decade. The eventual goal is to take it to $1 trillion.
- Foreign Trade Policy (2015-20) - It aims at doubling the overseas sales to $900 billion by 2019-20 and making India global, while integrating the foreign trade with “Make in India” and “Digital India Programme”. The scheme was continued further for two years.
- Remission of Duties and Taxes and Exported Products (RoDTEP) - It is a WTO-compatible mechanism for reimbursement of taxes/ duties/ levies, which are currently not being refunded under any other mechanism, at the central, state and local level.
- ROSCTL scheme - Support to textiles sector was increased by the remission of Central/ State taxes through the ROSCTL scheme, which has now been extended till March 2024.
- Certificate of Origin - Common Digital Platform for Certificate of Origin has been launched to facilitate trade and increase FTA (Free Trade Agreement) utilization by exporters.
- Agriculture Export Policy - A comprehensive policy to provide an impetus to agricultural exports related to agriculture, horticulture, animal husbandry, fisheries and food processing sectors, is under implementation. It was launched in 2018 for the first time.
- NIRVIK Scheme - The ECGC introduced the Export Credit Insurance Scheme (ECIS) called NIRVIK (Niryat Rin Vikas Yojana) to enhance loan availability and ease the lending process.
- General - Trade Infrastructure for Export Scheme (TIES), Market Access Initiatives (MAI) Scheme and Transport and Marketing Assistance (TMA) schemes to promote trade infrastructure and marketing.
- Summary: Higher exports are directly linked to economic growth rate of India. And that is also linked with higher jobs generation. Hence, pushing exports is a worthwhile goal.
- EXAM QUESTIONS: (1) Explain how a strong IPR regime helps build confidence in an economy. (2) What are the various kinds of IP that can be created? List and explain their distinct features. (3) Why do Indians file fewer patent applications compared to foreigners? Explain.
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