The Export Credit Guarantee Corporation (ECGC) has decided to withdraw coverage for shipments to Russia with effect from February 25, which is a huge setback for exporters, industry body FIEO said on Saturday.
Revising its underwriting policy on Russia, ECGC, a government-owned entity, has now put that country in the Restricted Cover Category (RCC-I) from the earlier 'open cover' category.
The Export Credit Guarantee Corporation (ECGC) has decided to withdraw coverage for shipments to Russia with effect from February 25, which is a huge setback for exporters, industry body FIEO said on Saturday.
Amid the ongoing conflict between Russia and Ukraine, ECGC in a communication said "based on the near-term commercial outlook, it has been decided to modify the country risk classification of Russia under the short-term and medium-and-long term with effect from February 25."
Revising its underwriting policy on Russia, ECGC, a government-owned entity, has now put that country in the Restricted Cover Category (RCC-I) from the earlier 'open cover' category.
Open cover categories enable policyholders to obtain cover on a more liberalised basis.
Federation of Indian Export Organisations (FIEO) Director General Ajay Sahai said that ECGC has "suddenly" withdrawn the coverage to shipments for Russia with effect from February 25.
"Such action is a huge setback to the exporting fraternity as the fate of cargoes which are at various Indian ports, some after customs clearance, for shipments will not be covered as ECGC has mandated Bill of Lading cut off date till February 25.
"Secondly, policies in force hold no good as risks are withdrawn. This immediate act of ECGC is a setback for exporters as political risks are one of the major components which ECGC covers," Sahai said.
ECGC Ltd, wholly owned by the Government of India, was set up in 1957 with the objective of promoting exports from the country by providing credit risk insurance and related services.
Over the years, it has designed different export credit risk insurance products to suit the requirements of Indian exporters and commercial banks extending export credit.
Sharing similar views, Hand Tools Association President S C Ralhan said now ECGC would not cover export shipments meant for Russia and it is a major setback for the exporting community.
In the present crisis between Russia and Ukraine, the payments against exports made by Indian exporters are at risk because Russian importers cannot make the payments in US dollars, Ralhan said.
If an importer in Russia is willing to pay the outstanding export bills in Indian rupees or Russian ruble, the Indian government should allow the realisation of export bills in Indian rupees or ruble, he added.
"In such cases the export incentives should not be denied as the payment is being received in Indian rupees or Russian Ruble due a crisis between two countries," he said.