The Hindu Business Line : ECGC sees claims rising to Rs 550 cr this fiscal

Bangalore, June 29 The Export Credit Guarantee Corporation (ECGC) will examine claims worth Rs 300 crore from the gems and jewellery sector on account of payment defaults by importers.

ECGC has already paid Rs 53 crore towards guarantees invoked in the textiles sector in the first half of the current calendar year. Another Rs 25 crore was disbursed to gems and jewellery exporters, faced with payment defaults, during this period.

The ECGC Chairman and Managing Director, Mr A. V. Muralidharan, told Business Line that as a result of the global economic meltdown, Corporation expects claims to rise to Rs 550 crore in 2009-10, against Rs 450 crore in 2008-09 and Rs 420 crore in 2007-08. The ECGC is a specialised credit risk insurance agency that guarantees export credits against payment risks by importers.

Mr Muralidharan said the ECGC had not stopped issuing guarantees to exporters, except in the case of automobile suppliers to US parent companies on the verge of bankruptcy.

In November, the ECGC had frozen issue of fresh credit risk insurance (CRI) cover to Indian component vendors of American auto giants General Motors, Ford Motors and Chrysler. “Even in such cases, the ECGC has said that they could continue to provide cover to suppliers of European arms of GM, Ford and Chrysler, as they are less affected by the crisis.”

Credit in check

He said that unlike the steps taken in other countries, ECGC had not raised insurance premiums or reduced the rating of crisis-ridden importing countries.

This had helped keep the cost of credit to Indian exporters in check, he explained. This was because exporters often resort to discounting their export bills with banks. Bills without ECGC cover are seldom accepted by the banks. Even if accepted, they are at high discounting rates leading to credit cost escalations.

ECGC had dropped the premium when the rupee depreciated sharply in September 2007-08. However, further reductions, Mr Muralidharan said, would require the approval of the insurance regulator.

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