ECGC in India: A Comprehensive Guide to Export Credit Insurance (2024)
Introduction
In the global market of today, Indian exporters are exposed to risks such as buyer defaults, political uncertainty, and payment delays. In order to contain such risks, the Export Credit Guarantee Corporation of India (ECGC) offers credit insurance and financial protection.
Whether you are an MSME exporter, a large enterprise, or a start-up, learning about ECGC’s function can assist you in securing payments, enhancing cash flow, and going global with ease.
This manual includes:
✔ What is ECGC & its function?
✔ Important ECGC schemes for exporters
✔ Advantage & eligibility
✔ Application process?
✔ Claim procedure & recent updates
What is ECGC
ECGC (Export Credit Guarantee Corporation of India) is a government sector company under the Ministry of Commerce. It was set up in 1957 and offers:
Export credit insurance (covers non-payment)
Bank guarantees (assists in securing export loans)
Risk coverage (commercial & political risks)
Mission: To enhance Indian exports by providing financial protection for overseas trade risks.
Top 5 ECGC Schemes for Exporters
1. Export Credit Insurance (ECIS)
Covering: Buyer insolvency, payment default, political risks.
Eligibility: All Indian exporters.
Premium: 0.5% – 2% of invoice amount.
2. Small Exporters Policy (SEP)
For: MSMEs & new exporters.
Covers: 90% of loss for commercial risks.
No requirement of turnover.
3. Export Turnover Policy (ETP)
For: Regular exporters with regular turnover.
Covers: All shipments under one policy.
4. Buyer-Specific Policy (BSP)
For: Large buyers/dealers.
Covers: Default risks for one specified buyer.
5. Overseas Investment Insurance
For: Indian companies to invest overseas.
Covers: Political risks such as war, expropriation.
Key Benefits of ECGC for Exporters
✅ Ensures payment by foreign buyers.
✅ Enhances bank finance (lenders favor ECGC-guaranteed loans).
✅ Protects political risks (war, currency restrictions).
✅ Assists MSMEs with low-cost schemes.
✅ Reduces bad debts & enhances cash flow.
How to Apply for ECGC Cover? (Step-by-Step)
Select the Correct Policy (ECIS, SEP, ETP, etc.).
Submit Application through ECGC’s portal (www.ecgc.in).
Give Documents:
Exporter’s PAN & GST
Bank details
Export invoices
Pay Premium (risk-based).
Obtain Policy Certificate (effective from the date of approval).
ECGC Claim Process
If buyer defaults:
Notify ECGC within 30 days of default.
Send Claim Form + supporting documents.
ECGC Verifies the claim (takes 30-60 days).
Compensation Paid (up to 90% of insured amount).
Recent ECGC Updates (2024)
Increased coverage limits for MSMEs.
Speedier claim settlements through digital processing.
New tie-ups with international insurers for broader risk coverage.
FAQs about ECGC India
1. Is ECGC mandatory for exporters?
No, but it’s strongly advised to minimize payment risks.
2. What risks ECGC does not insure?
Exchange rate fluctuations
Willful defaults by exporters
3. Are startups eligible for ECGC?
Yes, under the Small Exporters Policy (SEP).
Conclusion
ECGC is a lifeline for Indian exporters, saving them from financial losses and facilitating global growth. With the right policy, companies can reduce risks, avail loans, and grow sustainably.
Does ECGC Benefit Foreign Importers? Understanding Indirect Advantages
While ECGC (Export Credit Guarantee Corporation of India) primarily serves Indian exporters, foreign importers can gain several indirect benefits when dealing with ECGC-backed Indian suppliers. Here’s how international buyers benefit:
Key Benefits for Foreign Importers
- Enhanced Supplier Reliability
Indian exporters with ECGC coverage are:
More financially stable (90% payment risk coverage)
Better positioned to fulfill large orders
Less likely to default due to payment protection
- Improved Credit Terms
ECGC-backed suppliers can offer:
Longer payment periods (60-180 days vs 30 days)
Better pricing (due to lower risk premiums)
Flexible financing options
- Reduced Political Risk
ECGC covers:
War/civil disturbance risks
Currency transfer restrictions
Import bans in buyer’s country
Gives foreign buyers confidence in trade continuity
- Supply Chain Stability
ECGC’s export insurance helps Indian suppliers:
Secure working capital loans
Maintain production during economic downturns
Avoid disruptions from buyer payment delays
How Foreign Importers Can Leverage ECGC
Prefer ECGC-Covered Suppliers
Ask Indian vendors if they have active ECGC policies
Look for ECGC certification in supplier documents
Negotiate Better Terms
Request extended credit periods (since supplier’s risk is covered)
Discuss bulk discounts (due to supplier’s improved cash flow)
Verify Coverage Details
Confirm which risks are covered under supplier’s ECGC policy
Understand claim procedures in case of disputes
Limitations for Foreign Importers
❌ No Direct Claims – Only Indian exporters can file ECGC claims
❌ Coverage Varies – Depends on supplier’s specific ECGC policy
❌ Geographic Restrictions – Some high-risk countries may have limited coverage
Best Practices for Foreign Buyers
✔ Always request ECGC policy details from Indian suppliers
✔ Consider combining ECGC-backed trade with Letters of Credit
✔ Maintain transparent communication about payment terms
✔ Monitor ECGC’s country risk ratings for your market
Conclusion
While foreign importers can’t directly use ECGC services, dealing with ECGC-insured Indian exporters provides significant advantages in terms of reliability, credit terms, and risk mitigation. Smart international buyers should actively seek out and prefer ECGC-covered suppliers for more secure and favorable trade relationships.