Finance Minister Nirmala Sitharaman on Saturday announced Nirvik (Niryat Rin Vikas Yojana) scheme to provide enhanced insurance cover and reduce premiums for small exporters.
"To achieve higher export credit disbursement, a new scheme NIRVIK is being launched which provides for high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements," she said while presenting the Budget in Parliament.
Under the scheme, also called the Export Credit Insurance Scheme (ECIS), up to 90 per cent of the principal and interest is covered.
The Export Credit Guarantee Corporation currently provides credit guarantee of up to 60 per cent loss.
The other benefits of the scheme include enhanced confidence of banks to lend money, affordable and accessible credit to exporters, adequate flow of export credit, and simplified procedure for faster settlements.
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After getting an insurance coverage of 90 per cent, small exporters will get loans at a competitive rate of about 7.6 per cent, much lower than the current 9-11 per cent.
Exporters would also get dollar denominated funds at an interest rate of 3.5 per cent from the current 4-5 per cent.
The development assumes significance as exporters have raised concerns over credit availability.
In September last year, Commerce and Industry Minister Piyush Goyal had announced that the gems, jewellery and diamond (GJD) sector borrowers with limit of more than Rs 80 crore will have a higher premium rate under the NIRVIK scheme as compared to non-GJD sector borrowers of this category due to the higher loss ratio.
Commenting on the budget proposal, global trade information platform Connect2India.com founder and CEO Pawan Gupta said that the scheme should improve the export credit and insurance availability for MSME exporters.
"With high insurance cover, reduction in premium for small exporters and simplified procedures for claim settlements, the scheme is expected to achieve higher export credit disbursement, and would thus immensely help the existing MSME exporters as well as encourage the first time exporters to explore global opportunities," he said.
The country's exports contracted for a fifth month in a row by 1.8 per cent in December 2019 to USD 27.36 billion.
During April-December 2019-20, exports slipped 1.96 per cent to USD 239.29 billion, imports declined 8.9 per cent to USD 357.39 billion, leaving a trade deficit of USD 118.10 billion.
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