ECGC exporters' claims up on rising defaults

Severely hit by the rising payment defaults from overseas exports, the Export Credit Guarantee Corporation of India (ECGC) had paid Rs 786 lakh claims to 29 exporters from Punjab.

“The claims have been made to exporters from Punjab dealing in pharmaceutical, hosiery, engineering goods and agro product items,” said V Viswanathan, general manager (national marketing), ECGC.

He was speaking at a seminar on ‘New stimulus package to help SME exporters and banks’ organised by the Associated Chambers of Commerce and Industry of India (Assocham) at Ludhiana.

With the contraction in demand from overseas countries, ECGC registered sharp increase in claims by exporters from across the country in 2008-09, as compared with 2007-08, he said.

As against Rs 163 crore claims paid to exporters by ECGC in 2007-08 , it paid Rs 216 crore claims to 685 exporters across 82 countries in 2008-09. The claims paid on account of insolvencies of buyers accounted for Rs 37 crore, while Rs 177 crore was paid under default and non-acceptance. Also, ECGC paid claims under 26 commodity groupings to customers, Viswanathan said, adding that highest claims were paid to exporters dealing in the US markets. US constitutes 51 per cent of the claims paid by ECGC in 2007-08.

Speaking at the seminar, Avtar Singh, general secretary, Chamber of Industrial and Commercial Undertaking, Ludhiana, said Ludhiana export volumes stood at Rs 25, 000 crore in the 2008-09 fiscal. “However, the volumes will be less than Rs 20,000 crore this financial year as export demand for Ludhiana products in the European and West Asian markets plummeted substantially due to the global downturn,” he added.

Singh urged Assocham to lobby with the Reserve Bank of India (RBI) and ask schedule commercial banks to extend export credit to Ludhiana exporters at less than 5 per cent interest. “Banks still continue to charge high bill collection despite instructions from the RBI. As a result, export competitiveness of Ludhiana exporters is getting reduced,” he said.

Assocham has projected an export loss of Rs 5,000 crore in terms of volumes for industrial units located in Ludhiana due to demand contraction in Europe and West Asia.