Strengthen ECGC to promote export finance: Nirmala Sitharaman

NEW DELHI: Commerce and Industry Minister Nirmala Sitharaman today pitched for adequate headroom to ECGC so as to promote export finance, saying she will raise the issue with the Finance Ministry as well as the Reserve Bank.

Citing an estimate by Asian Development Bank, she said exports from India suffer due to unmet trade finance needs of as much as USD 300 billion.

"We shall take the issues of ECGC with the Finance Ministry to further strengthen it and will also negotiate with RBI so that greater room is given to ECGC because it cannot be too much regulated," she said here at the Diamond Jubilee celebrations of Export Credit Guarantee Corporation of India (ECGC).

At this crucial time, said Sitharaman, the government needs to support exporters to explore newer markets.

"We cannot tie their (ECGC) hands in the back... we need to support the ECGC and strengthen the organisation so that it gets the flexibility to operate," she added.

ECGC, wholly-owned by the central government, was set up with the objective of promoting exports by providing credit risk insurance and related services.

ECGC requires a proper space and headroom so that it can have the flexibility to support greater institutions of exports, Sitharaman said.

The minister said that exporters need to look at newer markets like Latin America and Africa as demand growth is slow in the traditional markets.

Sitharaman said that around 90 per cent of world merchandise trade and services involve credit, guarantee or insurance.

"Over 90 per cent of India's merchandise exports are made on short term credit i.e. less than 360 days. Engineering goods, chemicals, pharmaceuticals, textiles, garments, diamonds and leather account for a substantial share of exports," she said.

ECGC's role is very vital in handholding exporters in the trying times because exports have seen a continuous decline over several months, she added.

"We have to look for newer markets which maybe in Africa or in Latin America and it is for ECGC to stand by the exporters to assure them that they are not going to face any risk," Sitharaman said.