MUMBAI: ECGC Ltd is planning to set up a beachhead in Gujarat International Finance Tec (GIFT) City to provide export credit insurance in foreign currency to MNCs exporting from India and domestic companies operating out of SEZs.
The proposed move will also enable the export credit guarantee agency to provide export credit insurance in foreign currency to Indian companies’ overseas subsidiaries engaged in exports.
“Today, MNCs which export out of India take export credit insurance from their respective countries’ ECA (export credit agency). The reason is we cannot issue the cover in foreign currency. Currently, we can only do rupee business.
“So, having an outfit in IFSC (International Financial Services Centre) will address this market,” said Geetha Muralidhar, CMD of ECGC.
The ECGC Chief emphasized that a presence in IFSC at GIFT City will also allow her company to provide cover to a chunk of the export business happening out of SEZs.
“Further, if an Indian company’s subsidiary abroad exports out of that Country to a third Country, the latter takes credit insurance cover from the local ECA. But if we are able to offer them this cover, they won’t go elsewhere,” she said.
Once State-owned ECGC starts export credit insurance in foreign currency, exporters will save on hedging costs, thereby bringing down their overall cost of transaction, said Muralidhar.
“Suppose an international project is being jointly executed by Indian, German and South Korean project developers. Our presence in IFSC will enable us to easily support the Indian project developer,” she said. “This is a huge opportunity because Indian exporters are sub-contractors for many projects across the world.”
Gandhinagar-based GIFT City, a public-private partnership between Gujarat Urban Development Company Ltd and IL&FS Ltd, is the Country’s first IFSC.