As the Russia-Ukraine conflict intensifies, raising concerns among Indian exporters, the Export Credit Guarantee Corporation of India (ECGC) on Monday clarified coverage on export transactions to Moscow has not been withdrawn. It further said that it has only changed the cover category for the country from ‘Open Cover’ to ‘Restricted Cover Category – I’ (RCC-I), under which revolving limits (normally valid for a year) are approved specifically on a case-to-case basis.
The change came into effect on 25 February, 2022, said a statement from the Ministry of Commerce and Industry on Monday.
It said that change has been made to ensure that ECGC is able to assess and monitor the risks covered under its export credit insurance policies and to place appropriate risk mitigation measures.
The move is expected to enable the exporters and banks in India in assessing the export payment realisation prospects from buyers and banks in Russia.
The ministry has advised customers to contact their servicing branch of ECGC for cover on shipments to Russia. It added that ECGC continues to monitor the situation and further review of the underwriting policy will be undertaken based on future developments.
“In view of the prevailing situation, ECGC carried out a review of the country risk rating of Russia as per its extant underwriting policy. Accordingly, with effect from 25.02.2022, the cover category of Russia has been modified from Open Cover to Restricted Cover Category – I (RCC-I) for which revolving limits (normally valid for a year) are approved specifically on a case-to-case basis," said the statement.
Further, ECGC also clarified that the coverage on export transactions to Russia has not been withdrawn.
“It has been mentioned in various media reports that ECGC has withdrawn its cover on the export transactions to Russia vide its circular dated 25.02.2022; this is factually incorrect," it said.
In FY21, India’s exports to Russia stood at $2.6 billion, while imports stood at $5.5 billion. India shipped $469 million worth of pharma products and $301 million worth of electrical machinery to Russia.
Petroleum products made up for half of the imports from Russia. However, the $3.7 billion of petroproduct imports is minuscule against India’s overall $150 billion petroproduct imports.
US President Joe Biden has announced harsh sanctions against Russia after it launched an all-out invasion of Ukraine. Biden said the sanctions would limit Russia's ability to do business in major currencies such as dollars, euros, pounds and yen.
