(Taxcan, New Delho, 1 February 2023) The Economic Survey Report 2023 points out the significance of new Export Credit Guarantee Corporation (ECGC) policies to support Indian Exporters and the expectational changes by the 2023 Budget. The Export Credit Guarantee Corporation (ECGC) supports Indian exporters and banks by providing export credit insurance services. The new scheme launched in July 2022, under its ECIB products, has the enhancement of the mechanism of insurance cover to banks providing pre-shipment and post-shipment financeto 90 per cent from an average coverage of 70% for accounts with an export working capital limit of up to X20 crore to support small exporters. This framework could largely reduce the net demand for foreign exchange, the US dollar in particular, for the settlement of current account-related trade flows. Further, the use of INR in cross-border trade is expected to mitigate currency risk for Indian businesses. The Key aspect of this was that it could assist Indian exporters in getting advance payments in INR from overseas clients and in the longer term promote INR as an international currency once the rupee settlement mechanism gains traction.
India
India extends aid worth USD 3.9 billion to help Sri Lanka face economic crisis
(Asia News Initiative, New Delhi, 14 January 2023) India’s EXIM bank and State bank of India extended export credit facilities worth USD 1,500 million to Sri Lanka for the import of essential commodities. India has extended aid worth USD 3.9 billion to help Sri Lanka sustain itself in face of the acute economic and financial crisis and meet its immediate needs such as medicines, cooking gas, oil and food items, Sri Lanka based news publication News 19 reported. In February 2022, India signed an agreement for the supply of petroleum products worth USD 500 million from the Indian Oil Company through a credit line in order to help Sri Lanka overcome its fuel shortage. This was expanded by an additional USD 200 million worth of petroleum products in April 2022.
India has $5 bn new export opportunity in Russia
(Fortune India, Gurugram, 15 September 2022) With Europe maintaining trade sanctions on Russia, India has the potential to export $5 billion worth of goods to Russia in the next 12 months, A Shakhtivel, President, Federation of Indian Export Organisations (FIEO) has said. The export demand is high and supplies can start as soon as the rupee payment mechanism gets operationalised, he added. Russia now accounts for 18% of India’s crude imports; up from 1% The ongoing Russia-Ukraine conflict may open up a $22.5 billion worth export opportunity across 83 commodities for India, says an analysis carried out by MVIRDC World Trade Centre, Mumbai.
70% of Indian exporters’ payments stuck in Russia have come in
(Live Mint, India, 5 May 2022) As much as 70–80% of the payments for goods that were shipped to Russia before the Ukraine war have been coming in, a government official privy to the matter told Mint, comforting exporters. Exporters had claimed that about $500 million in payments were stuck after the war began in February. Stuck dues had become a pain point for Indian exporters, especially after Russia was cut off from the SWIFT payment gateway. In FY21 India’s exports to Russia stood at $2.6 billion, while imports were $5.5 billion. A number of exporters told Mint that those shipping goods to Russia were not being uniformly given insurance cover, which is provided by the state-owned Export Credit Guarantee Corporation, compounding their problems.
Indian Exporters Find Themselves Caught In Russia/Ukraine Crossfire
(Bloomberg Quint, New Delhi, 1 March 2022) Even before the harshest of sanctions hit, trouble had started to build for those in India doing business with Russia. On Friday evening, two days after Russia began attacking sites in Ukraine, Rakesh Shah, director at Nipha Exports in Kolkata, received an email from the Export Credit Guarantee Corporation of India stating that export credit guarantees for exports to Russia would now be approved only on a case-by-case basis and not as freely as it was before. This was done to account for the rising risk in the region, the government said in a release while clarifying that the cover has not been completely withdrawn. On Tuesday, Reuters reported that India’s largest bank State Bank of India has stopped transactions with Russian entities under sanctions to avoid being in breach of them. Nipha Exports has €1,00,000 worth of material to be shipped to Russia and unfulfilled orders worth €3,00,000 up to May this year. With impediments to trade rising, how quickly it will be able to resume shipments and get payments is anybody’s guess.
Indian exporters hold back shipments to CIS
(Deccan Chronicle, Secunderabad, 28 February 2022) The Export Credit Guarantee Corporation (ECGC) [of India] has decided to withdraw coverage for shipments to Russia with effect from February 25. ECGC in a communication had said: “based on the near-term commercial outlook, it has been decided to modify the country risk classification of Russia under the short-term and medium-and-long term with effect from February 25.” Indian exporters to Russia and CIS countries face uncertainty over goods worth $500 million due to the withdrawal of credit guarantee cover on items bound for the region, sanctions on Russian banks and feared disruptions at ports in the Baltic region.
Global capital racing towards clean energy
(Hindu Business Line, Chennai, 17 June 2021) India must accelerate its shift to renewable energy to attract more ESG funding and, thereby, meet its net zero emissions target. The International Energy Agency’s net zero emissions (NZE) roadmap by 2050 sets out the massive investment required to cut emissions and achieve the Paris goal of restricting global surface temperature increase to below 1.5 degree Celsius. Under the NZE roadmap, the use of unabated fossil fuels declines sharply to just over a fifth of the total energy supply. More than two-thirds of the energy supply in 2050 will come from renewables and around a tenth from nuclear. To meet these targets, total annual energy investment will have to surge to $5 trillion by 2030, more than tripling from just over $500 billion annually over the last five years to more than $1,600 billion in 2030. Further, the NZE roadmap requires annual investment in transmission and distribution grids to expand from $260 billion in 2021 to $820 billion in 2030. Global capital is already fleeing fossil fuels and moving towards more profitable clean energy — a shift that is now accelerating in response to net zero pledges last year by China, Japan and South Korea, a ratcheting up of climate ambition by President Biden’s administration and the recent announcement by G7 countries that they will exit all international coal financing by their export credit agencies.
Beijing and New Delhi court Indian Ocean armies with ECA loans
(African Intelligence, Paris, 1 April 2021) As China’s influence around the Indian Ocean increases, New Delhi is throwing itself wholeheartedly into a diplomatic battle to protect what it considers to be its turf. In March, the Indian Navy trained a group of about fifty members of Madagascar’s special forces and India’s INS Shardul and Madagascar’s MNS Trozona carried out joint naval exercises. During a visit to Mauritius, Indian minister of foreign affairs Subrahmanyam Jaishankar promised Prime Minister Pravind Jugnauth he would establish a $100m export credit for buying Indian military equipment, notably for the acquisition of aircraft and patrol vessels. The two countries also signed an agreement for India to supply a HAL (Hindustan Aeronautics Limited) Dhruv utility helicopter, and a patrol aircraft manufactured by Dornier, a HAL subsidiary. In 2016, New Delhi provided Mauritius with a Dornier Do-228 MP aircraft and then two Sarojini Naidu patrol vessels made by Goa Shipyard the following year. Paris is also beefing up military aid to Madagascar as Beijing and New Delhi jostle for influence.
Tell EXIM: Cut ties with India’s deadly Sasan coal plant
(Sierra Club, Oakland, 23 April 2021) More than a year has passed since the deadly April 10, 2020 coal ash disaster at the US EXIM-financed Sasan coal plant in Singrauli, India. The coal ash disaster was responsible for the deaths of six people and created a massive flood of coal ash that continues to pollute the water and community land almost a year later. Back in 2015, the Inspector General of EXIM issued a report revealing a stunning 19 fatalities at the facility. This followed a 2014 report from Sierra Club and NGOs that revealed forced resettlements, occupied houses being bulldozed in the middle of the night, labor abuses including employees handling hazardous materials without protection, and rampant environmental contamination of the local community. Since the2015 report, monitoring reports have revealed an additional eight deaths at Sasan, but the actual death count is probably even higher.
Flash: ECA financed Mozambique LNG sector braces for delays amid escalating violence
(Global Trade Review, London, 31 March 2021) French energy major Total has been forced to suspend operations at its liquified natural gas (LNG) project in northern Mozambique for the second time this year, after a fresh attack by insurgents which killed dozens of local and foreign citizens, with as many as 60 still missing. The Financial Times reports the ongoing risk of violence has led Total to reduce its workforce on the LNG project at the nearby Afungi site “to a strict minimum”. The suspension marks yet another setback for Total’s project, which had only recently started to resume operations following a decision to evacuate workers from the site in January due to heightened security risks. Such delays throw into doubt the slated 2024 production date of the project, and come less than a year after the company signed a bumper financing package worth nearly US$15bn with a cluster of commercial banks, export credit agencies (ECAs) and the African Development Bank (AfDB). ECA Watch member Friends of the Earth International reported in our June 2020 issue on how transnational corporate gas extraction in Mozambique was fuelling human rights abuses, poverty, corruption, violence and social injustice. In our June 2020 What’s New we also noted UKEF’s intent to commit some US$1 billion to the project. Bloomberg has reported on two additional LNG projects: the $4.7 billion Coral FLNG Project by ENI and ExxonMobil, and the $30 billion Rovuma LNG Project by ExxonMobil, ENI, and the China National Petroleum Corporation. A spokesperson for the Japanese ECA, the Japan Bank for International Cooperation, tells GTR that it is “closely monitoring” the security situation in Mozambique, in cooperation with the stakeholders of the project, including the operator, the sponsors and an external security consultant.
