The NIRVIK Scheme is introduced under the Export Credit Guarantee Corporation of India. The scheme aims to provide high insurance covers lingered with reduced premium to eligible exporters in India. The scheme came to effect on February 1st 2020, after being announced by the honorable Finance Minister. It aims to boost the export of the country.
Details of the NIRVIK Scheme
- The NIRVIK scheme aims to render high insurance coverage for Indian exporters while minimizing the premiums for small-scale exporters. It may result in higher export credit disbursement.
- The scheme came into effect when 10 out of 30 exporting sectors witnessed a negative surge in terms of outbound shipment in 2019.
- India’s exports in Dec 2019 fell for the fifth time on the trot by around 1.8 per cent to $357.39 b, leaving a trade deficit of $118.10 billion.
- The increasing concerns around credit availability amongst small scale exporters have led to the introduction of the NIRVIK Scheme.
- The advent of the NIRVIK Scheme declined the credit disbursement to INR 9.57 lakh crore in 2018-2019 from INR 12.39 lakh crore in 2017-18
Features of the NIRVIK Scheme
- Insurance coverage shall be up to 90 per cent of the principal amount & interest.
- The extended coverage shall ensure that export credit interest rates are below 4 per cent. The rupee export credit interest rates shall be confined to 8 per cent.
- Both pre and post-shipment credit shall be part of the new scheme.
- Borrowers from the jewellery, jems, & diamond with a limit of over INR 80 crores shall have a higher premium rate than those from sectors as the loss ratio is high.
- Those accounts have a limit below Rs. 80 crore, the premium rates shall be moderated to 0.60/annum. For those whose limits are higher than Rs. 80 Crore, the rates shall be 0.72/annum.
- In the event that there shall be losses surpassing Rs 10 crores, the exporter shall undergo inspection by the ECGC. The bank shall pay a monthly premium to the ECGC as the principal and interest are catered for both outstanding.
Benefits of the NIRVIK Scheme
- The NIRVIK Scheme shall play pivotal roles in strengthening accessibility and affordability of credit which in turn would make the Indian exports more competitive.
- The scheme undermines red-tapism and other procedural hindrances which will eventually benefit exporters.
- The extended insurance cover shall reduce the cost of credit.
- The scheme ensures better capital relief, improved liquidity, and prompt settlement of claims.
What are the Documentations required for the enrolment for NIRVIK?
Below is the list of documentation for the enrolment under the NIRVIK scheme
- Business Registration Documents: Regardless of the type of export agency, the applicant needs to furnish all official documents evidencing their relationship with business.
- GST Certificate: Small exporters must secure a GST certificate via the concerned tax authority
- Business PAN Card
- Identity Proof such as Aadhaar
- Certificate from the designated bank
- Insurance-related documents
An Overview on Export Credit Guarantee Corporation of India
- ECGC Ltd is a government-backed institution that was established in 1957. It aims to incentivize exports via the facilitation of credit risk insurance and allied services for exports. Over the years, it has formulated an array of insurance schemes to cater for the requirement of Indian exporters.
- ECGC is fundamentally an export boosting institution that seeks to strengthen the competitiveness of the Indian exports by facilitating them credit insurance covers.
- ECGC has rolled out various insurance schemes that enable commercial banks to extend export credit. ECGC[1] imposes a nominal interest rate against the credit disbursed to the exporters.
ECGC provides:
- A range of insurance covers against the risk of non-realization of export proceeds owing to political or commercial risks
- Different ranges of credit cover to banks and other institutions to empower them to extend credit facilities to exporters.
- Export Factoring facility for Micro, Small, Medium Enterprise sector, which is a package of financial items comprising of credit risk protection, working capital financing, and maintenance of sales ledger and collection of export receivables from the buyer resided abroad.
Conclusion
The NIRVIK Scheme is an exporter-benefit scheme that allows exporters to avail high insurance covers with minimal paper works or procedural hindrances. The insurance covers under the scheme attract minimal premium rates. The Finance Ministry launched this scheme with an aim to advocate India’s export.Â
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