ECGC & GSP

By :Ankit Khemani

ECGC

The Government of India set up the Export

Risks Insurance Corporation (ERIC) in July 1957

in order to provide export credit insurance
support to Indian exporters.
It was transformed into Export Credit &
Guarantee Corporation Limited (ECGC) in 1964.
To bring the Indian identity into sharper focus,
the Corporation's name was once again
changed to the present Export Credit
Guarantee Corporation of India Limited in
1983.

ECGC is a company wholly owned

by the Government of India.

It functions under the administrative control of
the Ministry of Commerce and is managed by a
Board of Directors representing Government,
Banking, Insurance, Trade, Industry, etc.
ECGC is the fifth largest credit insurer of the
world in terms of coverage of national exports.
The present paid-up capital of the company is
Rs.800 crores and authorized capital Rs.1000
crores.

What does ECGC do?

Provides a range of credit risk insurance covers

to exporters against loss in export of goods

and services.
Offers guarantees to banks and financial
institutions to enable exporters to obtain better
facilities from them.
Provides Overseas Investment
Insurance to Indian companies
investing in joint ventures abroad
in the form of equity or loan.

How does ECGC help exporters?

Offers insurance protection to exporters

against payment risks

Provides guidance in export-related activities
Makes available information on different
countries with its own credit ratings
Makes it easy to obtain export finance from
banks/financial institutions
Assists exporters in recovering bad debts
Provides information on credit-worthiness of
overseas buyers

Need for Export Credit Insurance

Payments for exports are open to risks even at

the best of times. The risks have assumed

large proportions today due to the far-reaching
political and economic changes that are
sweeping the world.
An outbreak of war or civil war may block or
delay payment for goods exported.
Economic difficulties or balance of payment
problems may lead a country to impose
restrictions on either import of certain goods or
on transfer of payments for goods imported.

In addition, the exporters have to face

commercial risks of insolvency or protracted

default of buyers.
The commercial risks of a foreign buyer going
bankrupt or losing his capacity to pay are
aggravated due to the political and economic
uncertainties.
Export credit insurance is designed to protect
exporters from the consequences of the
payment risks, both political and commercial,
and to enable them to expand their overseas
business without fear of loss.

ECGC Schemes
Maturity Factoring
Overseas Investment Guarantee
Exchange Fluctuations Risk Cover
Export (Specific Buyers) Policy
Post-Shipment Export Credit Guarantee
Construction Works Policy
Buyer Exposure Policies
Transfer Guarantee
Export Performance Guarantee

Export Finance (Overseas Lending) Guarantee

Software Project Policy
Insurance covers for Buyer's Credit and Line of

Credit
Service Policy
Consignment Exports Policy (Stockholding Agen
t and Global Entity)
Export Production Finance Guarantee
Specific Policy for Supply Contract
Specific Shipment Policy - Short Term (SSP-ST)
SCR or Standard Policy

 Export Turnover Policy

IT - Enabled Service (Specific Customer)

icy
Small Exporters Policy
Packing Credit Guarantee
Export Finance Guarantee

Pol

GSP
TheGeneralized System of Preferences,

orGSP, is a formal system of exemption from

the more general rules of the
World Trade Organization(WTO).
Specifically, it's a system of exemption from
themost favored nationprinciple (MFN) that
obligates WTO member countries to treat the
imports of all other WTO member countries no
worse than they treat the imports of their
"most favored" trading partner.

GSP exempts WTO member countries from

MFN for the purpose of lowering tariffs for the

least developing countries (without also doing
so for rich countries).
The idea of tariff preferences for developing
countries was the subject of considerable
discussion withinUNCTADin the 1960s.
In 1971, the GATT followed the lead of UNCTAD
and enacted two waivers to the MFN which
permitted tariff preferences to be granted to
developing country goods. Both these waivers
were limited in time to ten years.

In 1979, the GATT established a permanent

exemption to the MFN obligation by way of

theenabling clause.