Union Cabinet has approved the continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crores Grant-in-Aid over five years.
New Delhi: The Union Cabinet chaired by Prime Minister Narendra Modi today gave its approval for listing of Export Credit Guarantee Corporation (ECGC) Ltd. through the Initial Public Offer (IPO) on the stock exchange, Union Minister Piyush Goyal said during media briefing. I believe that ECGC could be listed on the stock exchange by next fiscal year, Goyal said.
Apart from this, the Union Cabinet has given its nod for an investment worth Rs 4,400 crore in ECGC Ltd in five years to provide support to exporters as well as banks. The move will help create 59 lakh new jobs including 2.6 lakh in the formal sector, Cabinet Committee on Economic Affairs (CCEA) said in a statement.
ECGC IPO
- ECGC Limited is a wholly-owned CPSE of Government of India set up with the objective of improving the competitiveness of the exports by providing Credit Risk Insurance and related services for exports, according to details provided by the CCEA.
- The Company intends to increase its maximum liabilities (ML) to Rs 2.03 lakh crore from Rs 1.00 lakh crore by 2025-26, the CCEA stated.
- The proposed listing of ECGC Limited 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, as per CCEA.
- 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, CCEA stated.
- The disinvestment proceeds will be used for financing of social sector schemes, according to CCEA.
ECGC Gets Rs 4,400 crore, More Jobs To Be Created
- The central government has undertaken a series of measures to provide a boost to the exports sector. In line with this, the Government has today approved capital infusion of Rs 4,400 crore to ECGC Ltd. over a period of five years, i.e. from FY 2021-2022 to FY 2025- 2026, the CCEA stated.
- The approved infusion along with efforts made to suitably synchronize with the listing process of ECGC through the Initial Public Offering will increase the underwriting capacity of ECGC to support more exports, according to the CCEA
- The approved amount will be infused in instalments thereby increasing the capacity to underwrite risks up to Rs 88,000 crore and 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 CCEA stated.
- In addition, in terms of the report ‘Export to Jobs’ published by World Bank and International Labour Organisation in February 2019, Rs 5.28 lakh crore exports will lead to formalization of 2.6 lakh workers. Further, the total number of workers (both formal and informal) will increase by 59 lakhs as per the report, according to the CCEA.
- Meanwhile, the Union Cabinet has approved the continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crores Grant-in-Aid over five years. The move will enable NEIA support project exports worth up to Rs 33,000 crores, the Central Government said
