ECGC withdraws coverage for shipments to Russia, Big blow for exporters, says FIEOAuthor: Nishu February 26, 2022
The Export Credit Guarantee Corporation (ECGC) has decided to withdraw coverage for shipments to Russia from February 25, in a major blow to exporters, industry body FIEO said on Saturday.
Amid the ongoing conflict between Russia and Ukraine, the ECGC said in a communication, “Based on the near-term commercial outlook, it has been decided to revise Russia’s country-risk classification under short-term and medium and long-term.” February 25.” Revising its underwriting policy on Russia, the state-owned ECGC has now moved that country to the Restricted Cover Category (RCC-I) from the earlier ‘open cover’ category.
Open cover categories enable policyholders to get cover on a more generous basis.
Federation of Indian Export Organizations (FIEO) director general Ajay Sahai said the ECGC has “suddenly” withdrawn coverage for shipments to Russia from February 25.
“Such action is a big blow to the export fraternity as the fate of cargo which is at various Indian ports, after certain customs clearance, will not be covered for shipment as ECGC has extended the Bill of Lading cut-off date till February 25. has been made mandatory.
“Secondly, the policies implemented are of no use as the risks are rolled back. This immediate action of the ECGC is a setback for the exporters as political risks are one of the major components covering the ECGC,” Mr. Sahai said.
ECGC Limited, wholly owned by the Government of India, was established 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 various export credit risk insurance products to suit the needs of Indian exporters and commercial banks extending export credit.
Sharing similar views, Hand Tools Association President SC Ralhan said that now ECGC will not cover export shipments to Russia and this is a big blow to the exporting community.
In the current crisis between Russia and Ukraine, payments for exports made by Indian exporters are at risk as Russian importers cannot make payments in US dollars, Mr. Ralhan said.
If an importer in Russia is willing to pay the outstanding export bills in Indian Rupees or Russian Rubles, the Indian government should allow recovery of export bills in Indian Rupees or Rubles, he said.
“Export incentives should not be denied in such cases as the payment is being received in Indian Rupees or Russian Rubles due to the crisis between the two countries,” he said.