The country is celebrating the 75th festival of independence, which is an opportunity to build a clear vision and roadmap for future India. The Cabinet Committee on Economic Affairs has approved capital infusion of ₹4,400 Crore to ECGC Ltd. over a period of five years, i.e. from FY 2021-2022 to FY 2025-2026. The approved infusion alongwith efforts made to suitably synchronize with the listing process of ECGC through the Initial Public Offering (IPO) will increase the underwriting capacity of ECGC to support more exports. ECGC endeavours to support Indian Export Industry with its experience, expertise and underlying commitment to progress and advance of India’s exports. ECGC plays a wider role in supporting exports from labor-intensive sectors and encourage bank lending to enterprises of small exporters thereby leading to their revival.
The pandemic has impacted the supply chains that in turn are aggravating demand and supply shocks. The effect on international trade over the next few years will depend on the scale and duration of the pandemic, and on the measures to contain it. The strain on companies’ liquidity, stress jobs, increasing insolvencies are already evident. In this context, the measures and balanced plans of our government is worthy of immediate achievement.
A study by International Chamber of Commerce reveals that global merchandise exports went down by 10% while global service exports went down by 20% in the year 2020 itself on account of Covid-19 pandemic. As a consequence of increasing risks, the defaults in the supply chain finance shot up by 500% in terms of number of obligers at value.
Around USD 172 billion of non-LC payments defaulted were defaulted. The INR equivalent of the same ₹1.2 lakh crore i.e. 1.01 % of total global exports. Considering the fact that the credit insurance cost averages around 0.2 to 0.3%, it is a huge stress on the balance sheet of credit insurers like ECGC. We assure the exporters that we have enough financial strength to mee the increased claim levels. We expect that it will be a one of event and the default levels will return to the mean in the current year. Further, comforting fact is that the global merchandise trade is expected to grow at a rate of 3.1 % per annum till 2030. This will enable the export sector to grow organically and at the same time recoup the losses incurred by the export credit agencies.
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