Govt. launches concessional credit scheme for developing countries

Union Minister for Commerce and Industry Anand Sharma with Joint Secretary, Department of Commerce, and Chairman and Managing Director of Export Credit Guarantee Corporation of India, Arvind Mehta (right) at the launch of Buyer's Credit Scheme, in New Delhi on Wednesday. Photo: Shiv Kumar Pushpakar.

Union Commerce and Industry Minister Anand Sharma on Wednesday launched a long-term concessional credit scheme to help build export infrastructure in developing nations including Africa, the Gulf and neighbouring countries like Bangladesh, Nepal and Sri Lanka.

The “Buyer’s Credit Under the NEIA’’ will enable Indian companies to be in a competitive position vis-a-vis peers from other nations in project bids. Sovereign governments and government-owned entities overseas can use the buyer’s credit facility for financing import of projects from India on deferred payment terms. The scheme has been developed by Export-Import Bank of India (EXIM Bank) in conjunction with the Export Credit Guarantee Corporation of India Ltd (ECGC).

“For big projects like rail, power and road infrastructure, developing countries can get long-term finance under this scheme. It will help build capacities in the developing countries,’’ Mr. Sharma told reporters after launching the scheme here.

Mr. Sharma said developing countries are the major markets for India's project exports and these countries demand medium to long-term credits. “With the introduction of this new product, I am sure, many project exporters would be in a position to venture into new markets and help diversify India's exports,’’ he added. Under the new scheme, developers can get loan up to 85 per cent of the contract value. The line of credit would be normally in the range of five to eight years.

“The product with its attractive feature of extending credit directly to overseas buyers of projects from India without recourse to Indian exports, will lead to a substantial rise in exports from India,’’ EXIM Bank chairman T.C.A. Ranganathan said. “Credit period would normally be five to eight years, however, longer credit period could be considered in deserving cases,’’ he said.

Explaining the features of the product ECGC chairman and managing director Arvind Mehta said while EXIM Bank will extend the credit facility, it will obtain credit insurance cover under NEIA through ECGC and the insurance premium will be borne by the project exporter.