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Many countries of the world have started adopting market-oriented economy and th e world is being integrated into a global

village. The market-oriented economy a lso means that there will be keen competition in all entrepreneurial activity an d the fittest will only survive. The emphasis will be on quality, price and effi cient distribution. In order to improve the quality and offer competitive prices industries will necessarily have to give greater importance to research and dev elopment and mass production. There will be more collaborations and technology a nd capital are bound to flow to developing countries where the production costs are cheaper. With mass production the companies cannot contend with only domesti c trade and are compelled to consider the world as a market to increase their sa les. This being the scenario, there will be greater trade among countries result ing in new entrants in the export-import trade. Besides, quality and price, cred it is going to play an important role in clinching an export deal. Credit while becoming an instrument in expanding export trade will increase payment risks in our export transaction. Payments for exports are always opened to risks at the b est of times. The risks have assumed even larger proportions today, due to the p olitical and economic changes that are sweeping the world over. It is in such a situation the need for export credit insurance is felt, even for credit transact ions, which are normally considered as safe. Export Credit Guarantee Corporation of India Ltd., has been providing the facili ty of export credit in the country since it was set up in the year 1957. It is t he oldest export credit insurance agency in the developing world. ECGC is a company wholly owned by the Government of India and functions under th e administrative control of the Ministry of Commerce. The primary goal of ECGC is to support and strengthen the export promotion drive in India by providing a range of credit risk insurance covers to exporters agai nst loss in export of goods and service also by offering guarantee covers to ban ks and financial institutions of enable exporters to obtain better facilities fr om them. ECGC basically provides two types of services. Export credit insurance policies are issued to the exporters protecting them from credit related risks and enabli ng them to expand their export trade. ECGC insures exporters against the risks o f not being paid by the overseas customers. These risks include default or insol vency of the buyer, exchange difficulties, which may block or delay remittance a nd new restrictions on imports imposed in the buyer s country. The Corporation iss ues Specific policies for exports of high value goods where payment are normally made of deferred terms. Such exports are in the nature of export of capital goo ds, constructions works, turnkey jobs or rendering services abroad. Guarantees to Banks Timely and adequate credit facilities, at the pre-shipment as well as post-shipm ent stage are essential for exporters to realise their full export potential. Exporters may not however, be able to obtain such facilities from their bankers for several reasons eg., the exporter may be relatively new to export business; the extent of facilities needed by him may be out of proportion to the equity of the firm or the value of the collaterals offered by the exporter may be inadequ ate. ECGC has designed several schemes of Guarantees to Banks with a view to enh ancing the creditworthiness of the exporters so that they would be able to secur e liberal and adequate facilities from their bankers. The Guarantees seek to ach ieve this objective by assuring the banks that in the event of an exporter faili ng to discharge his liabilities to the banks and thereby making the bank incur a loss, ECGC would make good a major portion of the bank s loss. The bank is requir ed to be co-insurer to the extent of the remaining loss. Any amount recovered fr om the exporter subsequent to payment of claims shall be shared between the Corp oration and the bank in the same ratio in which the loss was borne by them at th e time of settlement of claim. Recovery expenses shall be first charge on the am

ounts recovered.