What is NEIA?
The National Export Insurance Account has been set up by the Government of India (GOI) and operated by ECGC to provide adequate credit insurance cover to protect long and medium term exporters against both, political and commercial risks of the overseas country and the buyer/bank concerned. The NEIA trust also provides covers to banks for Buyer’s Credit transactions which facilitates foreign buyer to pay for project exports from India.
Indian companies secure overseas projects against stiff international competition and needs adequate credit insurance to enhance their competitiveness. Projects are required to be undertaken, specifically due to the long term economic interest and political relationship of India with importing country. Given India’s long term economic and political interests with the concerned country, it is crucial that ability of Indian exporters undertaking such contracts is not hampered by the inability to obtain credit insurance cover. With this view GOI has set up the NEIA.
ECGC, a Govt. of India enterprise under the aegis of the Ministry of Commerce, apart from insuring credit risks under short term exports also provides credit insurance cover to Medium and Long term exporters. However, at times, its own limitations make it difficult for ECGC to cover such risks on purely commercial considerations, taking into account the long repayment period, the large value of the contracts and the difficult economic and political conditions of the country, coupled with the fact that reinsurance cover is generally not available in such cases.
The NEIA Trust, a public trust set up by the Government will manage the funds provided by the Government. The trust has been assured a corpus of Rs.2,000 crores by the end of the 11th plan period. At any point of time an exposure equal to ten times of the corpus will be underwritten by NEIA subject to other criteria
To ensure proper & effective utilization of the NEIA scheme, to monitor its operations and to provide guidance, the GOI has set up a High Powered Committee, the Committee of Directions (COD) comprising :
- The Secretary-Ministry of Commerce- Chairman
- The Secretary-Department of Economic Affairs
- The Secretary- Ministry of External Affairs,
- The Additional Secretary and Financial Advisor-Dept. of Commerce,
- The CMD-ECGC,
- The CMD- Exim Bank,
- Representatives of the Reserve Bank of India,
- Joint Secretary- Ministry of Commerce & Industry, who is also a Member Secretary.
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