Export Credit Guarantee Corporation of India Limited (ECGC):

ECGC is an export promotion organization, seeking to improve the competitive capacity of an Indian exporter by giving them credit insurance covers comparable to those available to their competitors from most other countries.

  • In 1957, GOI had set up the Export Risk Insurance Corporation  (ERIC) in order to provide export credit & insurance support to the Indian Exporters.
  • In 1964, it is renamed as Export Credit Guarantee Corporation of India Limited (ECGC)
  • It is controlled by the Ministry of Commerce & Industry.
  • It is managed by Board of Directors representing GOI, Banking, Insurance, Trade & Industry.


  • Increase the competitive capacity of Indian exporters
  • Protects exporter against credit risk, i.e. non-payment by foreign buyers
  • Protect banks against the non-repayment of the loans by the exporters.
  • It enables the exporters to expand their export business without fear of loss
  • It enables the exporters to get timely & liberal credit from the bank
  • It enables the to take a calculated business risk in their business.


  • Helps exporters to get financial assistance from the commercial banks
  • Helps exporter to get credit worthiness report of the buyer
  • Provides insurance protection to exporters against payment risks
  • Provide guidance in export-related activities
  • Make the information available on different countries with its own credit rating
  • Assist exporters in recovering bad debts
  • Keeps it’s premium rates at the lowest level possible
  • Covers political & commercial risks

Need of Export Credit Insurance:

Payments for exports are open to risks even at the best of times. The risks have assumed large proportions today due to the far-reaching political and economic changes that are sweeping the world. An outbreak of war or civil war may block or delay payment for goods exported. 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 the transfer of payments for goods imported.

In addition, the exporters have to face commercial risks of insolvency or protracted default of buyers. The commercial risks of a foreign buyer going bankrupt or losing his capacity to pay are aggravated due to the political and economic uncertainties. 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.

Risks Not Covered by ECGC:

  • Losses due to disputes about the quality of the goods
  • Discrepancy in the amount
  • Mistakes committed by exporter or his agent
  • Failure or negligence on the part of the exporter to fulfill the terms of export order
  • Causes in the nature of the goods.

Risks Covered:

  • Commercial Risks
    • Insolvency of buyer
    • Buyer’s failure to accept the goods, when exporter is not at a fault
    • Failure of the buyer to make the payment due within a specified period, normally four months from the due date.
  • LC Issuing Bank
    • Insolvency of the L/c Opening bank.
    • Failure of the L/C opening bank to make the payment due within a specified period normally four months from the due date.
  • Political Risks
    • Imposition of restriction by the Government of the buyer’s country or any Government action, which may block or delay the transfer of payment made by the buyer.
    • War, civil war, revolution or civil disturbances in the buyer’s country.
    • New import restrictions or cancellation of a valid import license in the buyer’s country.
    • Interruption or diversion of voyage outside India resulting in payment of additional freight or insurance charges which can not be recovered from the buyer.
    • Any other cause of loss occurring outside India not normally insured by general insurers, and beyond the control of both the exporter and the buyer.


Reference: Export Credit Guarantee Corporation OF India Ltd