The Cabinet on Wednesday approved Rs 4,400-crore capital infusion in the state-owned credit insurance provider ECGC Limited and its listing through an initial public offering.
The government also approved continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crore Grant-in-Aid over five years.
Giving details of the decisions taken at the Cabinet Committee on Economic Affairs (CCEA), Commerce Minister Piyush Goyal said the government has undertaken a series of measures to provide a boost to the exports sector.
In line with this, he said the government has approved capital infusion of Rs 4,400 crore to ECGC Ltd (formerly known as Export Credit Guarantee Corporation of India Ltd.) over a period of five years (FY 2021-2022 to FY 2025- 2026).
The minister also informed that the country''s exports till September 21, 2021, this fiscal were at USD 185 billion and may touch USD 190 billion by the end of the first of the financial year.
The approved infusion along with efforts made to suitably synchronise with the listing process of ECGC through the Initial Public Offering will increase the underwriting capacity of ECGC to support more exports.
Goyal said Rs 500 crore will be infused in the ECGC immediately and another Rs 500 crore in the next financial year. The rest would be need based.
He also said the government will start the process to list the state-owned entity soon, and the IPO would hit the market during the next financial year.
Replying to a query regarding the capital infusion in ECGC, he said: "If we are able to insure more people (exporters) and use the available headroom, then the funds would be made available as and when required. Cabinet has specifically said that first instalment be released immediately, second instalment will try to synchronise it with DIPAM listing process which is why I said next year because I expect the listing the happen next year...," the minister said.
As regards the percentage of shares of ECGC to be listed, he said it could be fresh equity infusion or disinvestment or combination of both.
"...there is an established alternative mechanism which takes the decision in this respect. We will take it in due course," Goyal added.
ECGC Limited is a wholly-owned CPSE set up with the objective of improving the competitiveness of the exports by providing credit risk insurance and related services for exports.
The company intends to increase its maximum liabilities (ML) to Rs 2.03 lakh crore from Rs 1 lakh crore by 2025-26.
An official release in this regard said that the proposed listing of ECGC would unlock the true value of the company, promote ''people''s ownership'' by encouraging public participation in the equity holding of the company and also promote Corporate Governance through transparency and greater accountability.
"Listing may enable ECGC to mobilize fresh capital from the market either through the same IPO or subsequently through a Follow-on Public Offer (FPO) and thereby help in increasing the Maximum Liability cover for it," it said.
The disinvestment proceeds will be used for financing of social sector schemes.
The capital infusion in instalments would increase the ECGC''s capacity to underwrite risks up to Rs 88,000 crore. This will enable ECGC to issue covers that can support additional exports of Rs 5.28 lakh crore over the five-year period in line with the existing pattern, the release said.
The CCEA also continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crore Grant-in-Aid over 5 years.
The capital infusion in NEIA Trust will help tap the huge potential of project exports in focus market. NEIA will be able to support project exports worth up to Rs 33,000 crore.
A separate official release the fund infusion in NEIA will help create 2.6 lakh new jobs, including around 12,000 in formal sector.
Goyal also informed that exports have totalled Rs 185 billion till September 2021 in the current fiscal.
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.
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