Export Credit Insurance. ECGC, NIRVIK & Interest Subvention

What is Export Credit Insurance?

When you export goods, there is always a risk that the foreign buyer doesn't pay. Export credit insurance protects you against this risk. It covers non-payment caused by commercial reasons (buyer goes bankrupt, refuses to accept goods, doesn't pay within the agreed period) and political reasons (war, civil unrest, government-imposed import bans, currency inconvertibility).

In India, this insurance is provided primarily by ECGC Ltd (Export Credit Guarantee Corporation), a government-owned company under the Ministry of Commerce. ECGC covers roughly 40% of India's total export credit and is the backbone of the export insurance ecosystem.

Commercial risks

Buyer-side failures

Insolvency of the buyer, protracted default (buyer simply doesn't pay for months), failure to accept goods already shipped.

Cover: up to 90% (small exporters)

Claim trigger: non-payment for 4+ months

Political risks

Country-level disruptions

War or revolution in buyer's country, government-imposed import restrictions, payment moratorium, foreign exchange blockage.

Cover: up to 90% (small exporters)

Applies even if buyer is willing to pay

ECGC. How It Protects Your Exports

ECGC Ltd, fully owned by the Government of India, received a Rs 4,400 crore capital infusion to expand its insurance capacity. It offers multiple policy types depending on your export volume and risk appetite.

ECGC policy types

Whole Turnover (WT-ECIB)

Covers all shipments during the policy period. Best for exporters shipping to multiple buyers regularly. Premium is based on total anticipated turnover.

Shipment-specific

Covers individual shipments or specific buyers. Useful for large one-off orders or high-risk markets where you want targeted cover.

Small Exporter Policy

For exporters with credit limits up to Rs 20 crore. Provides 90% cover at concessional premium rates with simplified documentation.

Bank policies (WT-ECIB for banks)

Banks take ECGC cover on the export credit they disburse, protecting their portfolio against exporter default triggered by buyer non-payment.

How a claim works: Say you export textile machinery worth Rs 50 lakh to a buyer in Nigeria. The buyer accepts goods but doesn't pay after 4 months. You file a claim with ECGC. Under the small exporter policy with 90% cover, ECGC pays you Rs 45 lakh. ECGC then pursues recovery from the buyer directly.

NIRVIK. Enhanced Insurance for MSMEs

NIRVIK (Niryat Rin Vikas Yojana) is an enhanced version of ECGC insurance launched specifically to make export credit cheaper and more accessible, especially for MSMEs. Before NIRVIK, ECGC bank policies covered only 60% of the outstanding credit. NIRVIK raised this to 90%.

NIRVIK scheme. Key features

Insurance cover

Up to 90% of principal + interest (up from 60% under earlier scheme)

Credit types

Both pre-shipment and post-shipment credit covered

Premium

Moderated for MSMEs. Lower rates than standard ECGC policies

Effect on rates

Helps keep export credit below ~4% (foreign currency) and ~8% (rupee)

Target group

All exporters, with particular benefits for MSMEs

Why does 90% cover matter? When the bank's export credit portfolio is 90% insured by ECGC, the bank's risk drops dramatically. This means the bank can offer you lower interest rates and higher credit limits. For an MSME exporter shipping Rs 2 crore worth of goods, the difference between 60% and 90% cover can translate to 1-2 percentage points lower interest on your packing credit.

Interest Subvention on Export Credit

The Interest Subvention Scheme reduces the effective interest rate on export credit by giving exporters a direct rebate on the interest paid. From January 2026, the new scheme under the Export Promotion Mission (EPM) replaced the legacy Interest Equalization Scheme (IES) that had been running since 2015.

Interest subvention. Current parameters

Subvention rate

2.75% on pre-shipment and post-shipment rupee export credit

Eligibility

MSME manufacturer-exporters only (non-MSMEs excluded since July 2024)

Cap

Rs 50 lakh per exporter per year

Credit type

Rupee export credit only (not PCFC / foreign currency credit)

Disbursement

Credited directly to the exporter's account via the lending bank

Practical example: You are an MSME manufacturer exporting garments. Your bank charges 9% p.a. On rupee packing credit. Under the subvention scheme, the government reimburses 2.75%, so your effective rate is 6.25% p.a. On a Rs 1 crore packing credit for 180 days, that saves you roughly Rs 1.35 lakh in interest.

The scheme is being folded into EPM's broader Niryat Protsahan framework with a total outlay of Rs 3,000 crore. The government's intent is to continue support but with tighter targeting toward MSMEs that genuinely manufacture and export.

RBI Export Credit Period. 450 Days

RBI has extended the maximum period for export credit from 360 days to 450 days. This applies to both pre-shipment and post-shipment credit disbursed through March 2026. The 450-day window has been further extended through June 2026.

Extended credit periods

Standard period

360 days (pre-shipment: up to 180 days; post-shipment: up to 180 days from shipment date)

Extended period

450 days total for disbursals through March 2026

Repatriation of proceeds

Unchanged. 9 months from the date of export under FEMA

Concessional rate

Export credit at concessional rates available for the full 450-day period

Why this matters: Many export contracts, especially for capital goods, engineering products, and project exports, have payment cycles longer than 360 days. Without the extension, exporters would need to refinance at commercial rates after 360 days, losing the concessional export credit rate. The 450-day window keeps costs down for longer-cycle exports.

EXIM Bank Support for Exporters

Export-Import Bank of India (EXIM Bank) is a specialized financial institution that supports Indian exporters with products beyond what commercial banks typically offer. While commercial banks handle day-to-day packing credit and post-shipment finance, EXIM Bank focuses on larger, more complex export financing needs.

EXIM Bank products

Pre-shipment credit

Working capital finance for production and procurement of export goods

Post-shipment credit

Finance against export receivables and bills

Buyer's Credit

Credit extended to foreign buyers to purchase Indian goods. Makes your offer more competitive by offering payment terms

Lines of Credit (LoC)

Government-backed credit lines to foreign governments/institutions. Indian exporters can supply against these LoCs with assured payment from EXIM Bank

Ubharte Sitaare

Programme for high-potential mid-size exporters. Provides finance, mentoring, and market access support

How to Get Started

Setting up export credit insurance and accessing subsidized credit involves working with three entities: ECGC for insurance, your AD bank for credit, and DGFT/RBI for scheme benefits. Here is what you need.

Documents and prerequisites

• Valid IEC (Import Export Code) from DGFT
• RCMC from relevant Export Promotion Council
• Udyam Registration (for MSME interest subvention)
• Last 3 years audited financials (balance sheet, P&L)
• Export order copies or LC from buyer
• Buyer details for ECGC credit limit approval (name, country, amount, payment terms)
• Bank account with an Authorised Dealer (AD) bank
• ECGC policy application (available on ecgc.in)

Step-by-step process

Step 1

Apply for ECGC policy at ecgc.in. Choose Whole Turnover or Shipment-specific based on your export pattern

Step 2

Get credit limits approved for your buyers. Submit buyer details and ECGC assesses the risk

Step 3

Approach your AD bank with the ECGC policy and request export credit limits (packing credit + post-shipment)

Step 4

Mention NIRVIK scheme for moderated premium and higher cover. Ask bank to apply NIRVIK rates

Step 5

If you are an MSME manufacturer, ensure Udyam registration is linked and ask for interest subvention benefit

Step 6

Draw down credit against each export order. Subvention is applied automatically by the bank at quarter-end

Sources & citations

• ECGC Ltd. Standard Policy for Shipments (Comprehensive Risks), NIRVIK Scheme guidelines.
• RBI Master Direction on Export Credit..
• Circular on 450-day extension (2025-26)..
• DGFT. Export Promotion Mission (EPM) Notifications, Interest Subvention Scheme parameters. EXIM Bank. Ubharte Sitaare Programme, Lines of Credit..
• Ministry of Commerce. Press releases on ECGC capital infusion and export credit insurance reforms.

Update history

• 2026-08-11 First published.