We are trying different methods to reduce costs for exporters, says ECGC Chairman
We are trying different methods to reduce costs for exporters, says ECGC Chairman
ECGC Ltd., the Government of India company that provides export credit insurance, is in the process of approaching the Reserve Bank of India (RBI) for approval to trade foreign exchange on behalf of exporters.
“We are trying different methods to reduce costs for exporters. We are applying to RBI to give us permission to trade in foreign currencies and we will provide funds in foreign currency and factoring will be done in the foreign currency that invoices are issued in,” said M. Senthilnathan, CMD, ECGC am Thursday.
“So that we can calculate interest and a certain margin in the western markets if necessary. Once ECGC has been approved as an authorized dealer for foreign currency factoring, we may do more factoring. Currently only 3 to 4 exporters do factoring,” he added.
He spoke at a webinar organized by Peppystores on “The Importance of Export Credit Insurance for MSME Exporters in Post-Covid Trade”.
He explained that the ECGC has a development mandate to promote exports and said the institution’s entire approach was market-oriented, not profit-oriented.
He urged exporters to expand their international business by providing buyers with credit and proper insurance.
A. Sakthivel, President of the Federation of Indian Export Organizations (FIEO), said every exporter must take out credit insurance. He called on the government and the ECGC to develop special credit insurance products for MSMEs, which make up a large proportion of exporters.
He also said the ECGC should consider setting a firm deadline for claims settlement and going online for the convenience of exporters.
Panelist Ramesh Rajah, President (Coffee Exporters Association) and Chairman of Ramesh Exports Pvt. ltd called on the ECGC to issue commodity-specific credit insurance covers to reduce costs for coffee exporters.
“If ECGC increases rates, they should do a commodity-related analysis. They should come out with differentiated risk premia for different commodities based on risk factors,” he said.
“Why should I pay a high premium? [to offset the losses caused in commodities that have high risk]? MSMEs should be supported,” he said. “Raw materials, capital and logistics are the main costs for exporters. All costs are increasing and risks are increasing,” he added.
