11.8.

1 MEANING
Export Credit and Guarantee Corporation of India Ltd. (ECGC) was established by the
Government of India in December 1983. ECGC is a fully owned Government Company. It
operates under the overall supervision of the Ministry of Commerce. It is managed by a
Board of Directors. These directors are representatives of the Government, RBI, banking,
insurance and export community. ECGC insures the exporters and finds finance for them.
11.8.2 OBJECTIVES OF ECGC
The main objectives of ECGC are:
(a) To facilitate the growth of Indias export trade by providing credit insurance cover to
India exporters and giving them guarantee for enlarging exports of the country.
(b) To provide the supplementary facilities which are necessary for diversifying exports.
(c) To conduct any other function which the Government asks them to do from time to time.
This includes giving credit and guarantees in foreign currencies for importing raw materials
which are required for manufacturing of processing export goods. ECGC does not give
direct export assistance to the exporters. It only helps them to get export finance from the
lending institution. They do this by agreeing to share the risk with the lending institution,
through their policies and guarantees. The ECGC issues different types of insurance
policies in order to protect the interest of exporters and the lending institution. It also collects
and distributes information regarding credit worthiness of overseas buyers. Banks and
financial institution need guarantee for lending financial support to the exporters. A number
of financial guarantees have been introduced by ECGC on the strength of which credit can
be extended to exporters and banks and financial institution are protected.
POLICIES ISSUED BY ECGC
ECGC issues policies which cover the various risks involved in export trade. They are as
follows:
(A) Standard policies: Standard policies are issued to cover various political risks and
commercial risks. There are four policies which are issued under standard policy.
(i) Shipments (Comprehensive Risks) policy to cover both commercial and political risks
from the date of shipment. (ii) Shipments (Political Risks). policy to cover only political risks
from the date of shipment. (iii) Contract (Comprehensive Risks) policy to cover both
commercial and political risks from the date of contract. (iv) Contract (Political Risks) policy
to cover only political risks from the date of contract. 90% of the losses on account of
political and commercial risks are covered by ECGC. It may be less than 90% in cases of
certain countries or some shipments.
(B) Specific policies: Contract for exports of capital goods, turnkey projects or construction
works and those projects which are not of a repetitive nature are required to be insured by
EGCG on a case - to - case basis under specific policies. There are various types of
policies under this which are:
1. For supply contracts:
(i) Specific shipments (comprehensive Risks ) policy to cover both commercial and political
risks at the post shipment stage.
(ii) Specific shipment ( Political Risks) policy to cover political risks at the post - shipment
stage in cases where the buyer is overseas government or payments are guaranteed by
Govt. or by banks.
(iii) Specific contracts (Comprehensive Risks) policy.
(iv) Specific contract (Political risks) policy.

2. For buyers credit or Line of credit: The buyers credit as the name suggests in the
credit granted to the buyers by the financial institution to finance a particular export contract.
ECGC has a policy under which financial institution such credit get insured. Under lines of
credit, a loan is extended to Govt. of financial institutions is the importing country for
financing import of specified items from the leading country.
(C) Services policy: A wide range of services such as , technical, professional, etc. are
rendered to overseas buyers. When an exporter renders services to overseas buyers, there
is a risk of payment which can be insured under service policies of ECGC.
There are two type of policies which are available namely :
(a) Specific services contract (Comprehensive Risks) policy which covers both political and
commercial risks.
(b) Specific services contract (Political Risks) policy, which covers only political risks. If the
services are obtained by overseas government, specific services contract (Political Risk policy
in takes. On the contrary, if services are to be utilised by private buyers which are not
guaranteed by banks a comprehensive risks specific service contract - Policy is obtained.
Such policies cover 90% of the loss suffered by the seller. A wide range of services, like
technical or professional services, hiring or leasing can be covered under these policies.
(D) Construction works policy: This policy is basically to cover turn-key projects involving
suppliers and services. Two types of policies which are evolved to cover the risks are
namely Govt. and private buyers. Contract with Govt. buyers are covered with political risks
and private buyers are covered with comprehensive risks. The policies, issued to cover
contract with government, the percentage of loss payable by ECGC is 85% and that of
private buyers 75%.
(E) Special Policies: Specific policies are meant for special ECGC scheme for small
exporters. In order to give boost to export from small exporters special policies have been
drafted for them with various features. This scheme is restricted to those exporters whose
anticipated total export turnover for the period of 12 months ahead is not more them Rs. 25
Lakhs. This scheme covers 95% of commercial risks and 100% political risks.