The government said the capital infusion and planned IPO will increase ECGC’s underwriting capacity up to Rs 88,000 crore and facilitate additional exports of Rs 5.28 lakh crore over a five-year period.
The Cabinet also approved continuation of National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crore through grant-in-aid over five years.
Commerce and industry minister Piyush Goyal said the listing of ECGC is likely to happen next year. “ECGC has been giving profits for three years, and pays dividend regularly,” he said.
ECGC, a wholly-owned CPSE of the government of India, provides insurance covers to banks towards credit to exporters, helping facilitate trade financing and other related services.
“The company intends to increase its maximum liabilities (ML) to Rs 2.03 lakh crore from Rs 1 lakh crore by 2025-26,” the commerce and industry ministry said in a statement.
The stock exchange listing would enable ECGC to mobilise fresh capital from the market either through the IPO or subsequently through a follow-on public offer (FPO) and thereby help in increasing the maximum liability cover for it.
“The disinvestment proceeds will be used for financing of social sector schemes,” it said.
The government’s Rs 4,400 crore support to ECGC will be provided over five years beginning 2021-22. Of this, Rs 500 crore will be infused immediately and another Rs 500 crore in the next fiscal.
The government said additional exports would help create 5.9 million new jobs, including 260,000 in the formal sector.
“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,” the ministry said.
The Rs 1,650 crore capital infusion into NEIA over five years is expected to support project exports up to Rs 33,000 crore and help create 260,000 new jobs, including around 12,000 in the formal sector, a government statement said.
As per the statement, this will translate into an estimated output of domestically manufactured goods to the tune of Rs 25,000 crore approximately.
On export performance, Goyal said despite the odds, India’s merchandise goods exports were at $185 billion as of September 21, which was the highest ever in the first six months of a fiscal year. “We will hopefully close at about $195 billion by the end of the half-year but shipping rates and container shortage are a reality,” he said.
Doubling railway line
The Cabinet also approved the doubling of the Nimach-Ratlam railway line in Madhya Pradesh at a total estimated cost of Rs 1,095.88 crore and the doubling Rajkot-Kanalus railway line in Gujarat at a total estimated cost of Rs 1,080.58 crore.
The Cabinet Committee on Economic Affairs (CCEA) approved the continuation of National Scheme for PM POSHAN in Schools for the five-year period to FY26.
