Government Schemes & Policies
- Nirvik scheme may give fillip to export credit
Bilateral & International Relations
- MNRE Hosts 2nd Assembly of International Solar Alliance (ISA) in New Delhi
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Government Schemes & Policies
Nirvik scheme may give fillip to export credit
In the last four to five years, ECGC has paid nearly ₹1,000 crores a year towards claims to various banks and subsequently, it gradually decreased the cover. However, ECGC is optimistic that business and lending would pick up soon and the scheme would give a fillip to it.
ABOUT NIRVIK SCHEME
- NIRVIK scheme was announced by the Export Credit Guarantee Corporation of India (ECGC) in September 2019.
- It is a 5-year scheme.
- to simplify the process of procuring a loan from financial institutions
- to increase the loans offered to exporters in India
BENEFITS OF NIRVIK SCHEME
- Insurance cover percentage has been enhanced to 90% from the average of 60% for both Principal and Interest.
- Enhanced cover will ensure that Foreign and Rupee export credit interest rates will be below 4%and 8% respectively for exporters
- High premium rates for gems, jewellery and diamond (GJD) sectors with a limit of more than Rs.80 crores due to high loss ratio
- Enables the Indian exports to be competitive in national and international markets
- Reduced cost of insurance and tax reimbursements to increase productivity and increase credit loans
- Reduced cost of credit due to capital relief
ABOUT EXPORT CREDIT GUARANTEE CORPORATION (ECGC)
- ECGC Ltd, wholly owned by Government of India, was set up in 1957.
- It was Formerly known as Export Credit Guarantee Corporation of India
- It aims to promote exports from the country by providing credit risk insurance and related services for exports.
- It functions under the administrative control of Ministry of Commerce & Industry and is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, and insurance and exporting community.
- Finance Minister in Pandit Nehru’s cabinet appointed a special committee under the Chairmanship of T.C.Kapur to examine the feasibility of setting up an effective organization to provide insurance against export credit risks.
- The Government accepted the recommendations of Kapur Committee and thus the Export Risk Insurance Corporation (ERIC) was registered in 1957.
WHAT DOES ECGC DO?
- Provides a range of credit risk insurance covers to exporters against loss in export of goods and services.
- Offers Export Credit Insurance covers to banks and financial institutions to enable exporters to obtain better facilities from them.
- Provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan.
HOW DOES ECGC HELP EXPORTERS?
- Offers insurance protection to exporters against payment risks.
- Provides guidance in export-related activities.
- Makes available information on different countries with its own credit ratings.
- Makes it easy to obtain export finance from banks/financial institutions.
- Assists exporters in recovering bad debts.
- Provides information on credit-worthiness of overseas buyers.
NEED FOR EXPORT CREDIT INSURANCE
- The Payments risks have assumed large proportions today due to the far-reaching political and economic changes.
- However, an outbreak of war or civil war may block or delay payment for goods A coup or an insurrection may also bring about the same result. Economic difficulties or balance of payment problems may lead a country to impose restrictions on either import of certain goods or on transfer of payments for goods imported.
- Export credit insurance is designed to protect exporters from the consequences of the payment risks, both political and commercial, and to enable them to expand their overseas business without fear of loss.
Bilateral & International Relations
MNRE Hosts 2nd Assembly of International Solar Alliance (ISA) in New Delhi
Minister of Power, New & Renewable Energy hosts 2nd Assembly of International Solar Alliance (ISA) at New Delhi.
HIGHLIGHTS OF THE 2ND ASSEMBLY OF INTERNATIONAL SOLAR ALLIANCE
Two countries: Eritrea and St. Kittis and Nevis, signed the framework agreement of ISA. With this signing, 83 countries have signed the ISA framework agreement.
ABOUT INTERNATIONAL SOLAR ALLIANCE (ISA):
- ISA is initiative jointly launched by India and France in November 2015 at Paris on side lines of COP21 UN Climate Change Conference.
- Its Framework Agreement came into force in December 2017. It celebrated its founding day on 11th March, 2018.
- It is a treaty-based international organization.
- It is a group of 121 solar resource-rich countries. 83 countries have signed the ISA framework agreement. 58 countries have ratified the ISA agreement.
- It is headquartered at campus of National Institute of Solar Energy (NISE), Gurugram, Harayana, making it first international intergovernmental treaty based organization to be headquartered in India.
- Currently, the ISA is not funding projects directly, but assist member countries in finding suitable bilateral or multilateral funding. The World Bank and French Development Agency are developing a Solar Risk Mitigation Facility for this purpose.
- ISA have partnered with over 40 organizations including UN, Multilateral Development Banks (MDBs), Development Finance Institutions (DFIs), international and regional organizations and foundations, and private sector players.
OBJECTIVES OF ISA:
- Undertake joint efforts required to reduce the cost of finance and the cost of technology
- Deploy over 1,000 gigawatts of solar energy and mobilize more than US $1000 billion of investments needed by 2030 for massive deployment of solar energy
WHO CAN JOIN THE INTERNATIONAL SOLAR ALLIANCE?
- Must be Solar resource-rich States which lie fully or partially between the Tropic of Cancer and the Tropic of Capricorn.
- Must be member of the United Nations.
ONGOING PROGRAMS OF ISA:
ISA presently has 5 ongoing programs:
- Scaling Solar Mini Grids
- Affordable Finance at Scale
- Scaling Solar Applications for Agricultural Use
- Scaling Solar Rooftop catering to the needs of solar energy in specific areas
- Scaling Solar E-Mobility & Storage
- The ISA has launched a Solar Technology Application and Resource – Centre ( iSTAR-C) to support capacity building efforts in the ISA member countries.
- It is also developing Solar INFOPEDIA, funded by European Union, dedicated to the dissemination of information, best practices and knowledge on Solar Energy.
- Other programmes are ITEC Master Trainers Programme at NISE Gurugram and M. Tech programme for mid-career professionals at IIT, Delhi.
FUNDING FROM INDIA:
- India will contribute Rs. 160 crores to the ISA over 5-year duration from 2016-17 to 2020-21. India will release additional Rs. 15 crores in the year 2020-21.
- In addition, public sector undertakings of the India namely Solar Energy Corporation of India (SECI) and Indian Renewable Energy Development Agency (IREDA)have made a contribution of US $ 1 million each for creating the ISA corpus fund.
OTHER SOLAR FUNDING BY INDIA
- India has provided US$ 2 Billion for solar projects in Africa out of Government of India’s US$10 Billion concessional Line of Credit (LOC) for Africa. Exim Bank of India is implementing this line of credit.
- In September 2019, India announced allocation of US$ 12 million grant, and a concessional LOC of US$ 150 Million for Pacific Islands Developing States for undertaking solar, renewable energy and climate related projects.
- At the United Nations Climate Action Summit 2019, Indian Prime Minister pledged to increase renewable energy capacity of India to 175 GW by 2022 and committed for further increasing it to 450 GW.
- India has 82 GW renewable capacity on ground and about 70 GW at different stage of fruition.