KOLKATA: About 50 Indian companies may lose project export contracts worth $15 billion due to unavailability of insurance cover and government's subvention, Export Import Bank of India chairman and managing director Yaduvendra Mathur said.
These companies had secured export contracts from overseas buyers and Exim Bank had in-principal approved $8 billion credit to the buyers under a new financing mechanism under National Export Insurance Account (NEIA). The scheme allows
Exim Bank to offer credit at a soft rate while the Indian government provides interest equalization support of 2% per annum to it.
There has been a delay in receiving insurance cover and interest subvention stalling the process of sanctioning of the loans. The government is perhaps holding back subvention due to strains in its finances.
"These companies may lose the orders," Mathur said. "We have flagged off the issue and the government is looking into it," he said at a Ficci event in Kolkata.
The state-owned Exim Bank offers long term buyer's credit to promote projects exports for eight and to 15 years. NEIA, through Export Credit Guarantee Corporation, provides risk cover up to 100% for the facility as also cover the exchange rate fluctuation risk till repayment.
Mathur said insurance cover is not available for these export contacts due to ECGC's capital constraints.
According to Exim Bank's annual report, it has so far sanctioned $1.4 billion for 11 projects valued at $2.7 billion under the new mechanism. Buyer's credit supports project exports especially in the infrastructure sector.
Exim Bank also extends buyer's credit for medium term without insurance cover to finance export of capital goods, plants and machinery but interest rate are normally higher in such cases, deputy managing director Debashish Mallik said.
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