NIRVIK Scheme: A Comprehensive Guide to Export Credit Insurance
Exporting is one of the most important aspects of international trade, with many countries relying heavily on exporting goods and services to drive their economies. However, exporting also comes with its own set of risks, including payment defaults, political risks, and issues with buyers. To address these concerns, the Indian government introduced the NIRVIK scheme in 2019, which aims to provide exporters with credit insurance to mitigate risks and encourage exports. In this article, we will take a comprehensive look at the NIRVIK scheme, its benefits, and how it works.
What is the NIRVIK Scheme?
The NIRVIK scheme, also known as the Export Credit Insurance Scheme (ECIS), was launched by the Indian government in September 2019. It is administered by the Export Credit Guarantee Corporation of India (ECGC) and provides exporters with insurance cover for payment default risks by overseas buyers, as well as other risks that may impact exports. This scheme aims to enhance the accessibility of credit for exporters, particularly micro, small and medium enterprises (MSMEs).
Objectives of the NIRVIK Scheme
The primary objective of the NIRVIK scheme is to provide credit insurance to Indian exporters, particularly MSMEs, and increase the volume of exports from India. The scheme is also aimed at reducing the cost of credit, improving the cash flow of exporters, and encouraging diversification of export markets.
Key Features of the NIRVIK Scheme
The NIRVIK scheme has several key features, including:
Comprehensive Coverage
The NIRVIK scheme provides comprehensive insurance coverage to exporters, covering both pre-shipment and post-shipment credit risks. This means that exporters are covered for losses that may occur during the entire export cycle, from the time the goods leave the factory until the final payment is received. G20 Meeting 2023
High Insurance Cover
Under the NIRVIK scheme, exporters can get up to 90% insurance cover for the value of their exports. This high insurance cover helps exporters to mitigate risks and protects them from financial losses due to payment defaults by overseas buyers.
Competitive Premiums
The premiums charged under the NIRVIK scheme are competitive, making it affordable for exporters, particularly MSMEs. The premium rates are determined based on the creditworthiness of the buyer, the country of the buyer, and the nature of the goods being exported.
Easy Claim Settlement
The claim settlement process under the NIRVIK scheme is simple and hassle-free. Once the exporter files a claim, the ECGC settles it within a maximum of 30 days, subject to submission of all required documents.
Benefits of the NIRVIK Scheme
The NIRVIK scheme offers several benefits to exporters, including:
Mitigation of Risks
The NIRVIK scheme provides exporters with insurance cover against payment defaults by overseas buyers, as well as other risks that may impact exports. This helps exporters to mitigate risks and protect their financial interests.
Improved Access to Credit
With the NIRVIK scheme, exporters can get up to 90% insurance cover for the value of their exports. This high insurance cover helps exporters to access credit from banks and financial institutions at lower interest rates.
Increased Cash Flow
The NIRVIK scheme ensures that exporters receive their payments on time, which improves their cash flow and helps them to manage their finances effectively.
Diversification of Export Markets
The NIRVIK scheme encourages exporters to diversify their export markets by providing them with credit insurance cover for exports to both traditional and non-traditional markets. This helps to reduce dependence on a single market and minimizes the impact of market fluctuations.
Reduction in Cost of Credit
With the high insurance cover provided under the NIRVIK scheme, exporters can access credit from banks and financial institutions at lower interest rates. This helps to reduce the cost of credit and makes it more affordable for exporters, particularly MSMEs.
Eligibility Criteria for the NIRVIK Scheme
To be eligible for the NIRVIK scheme, exporters must fulfill the following criteria:
- Must be registered with the Directorate General of Foreign Trade (DGFT)
- Must have a clean track record of export performance and credit history
- Must have a minimum export turnover of INR 40 lakhs in the preceding year
- Must have a maximum of 90 days credit period
- Must not have any outstanding claim or dispute with ECGC or banks
Application Process for the NIRVIK Scheme
The application process for the NIRVIK scheme is simple and straightforward. Exporters can apply online through the ECGC website or offline by submitting the application form along with the required documents to the nearest ECGC branch office.
The required documents for the application include:
- Copy of the Export Order or Contract
- Copy of the Invoice
- Copy of the Bill of Lading
- Copy of the Purchase Order or Contract with the supplier (in case of imports)
- Copy of the Letter of Credit (if any)
Once the application is processed, the exporter will receive an insurance policy covering the export transaction.
Conclusion
The NIRVIK scheme has been a game-changer for Indian exporters, particularly MSMEs, providing them with credit insurance cover to mitigate risks and enhance the volume of exports from India. With its comprehensive coverage, high insurance cover, competitive premiums, and easy claim settlement process, the scheme has made it easier for exporters to access credit, improve their cash flow, and diversify their export markets. It is a step towards creating a more vibrant and robust export ecosystem in India.
FAQs
- Is the NIRVIK scheme only for MSMEs?
No, the NIRVIK scheme is open to all registered exporters who meet the eligibility criteria.
- What is the maximum insurance cover under the NIRVIK scheme?
Exporters can get up to 90% insurance cover for the value of their exports.
- How long does it take for the ECGC to settle a claim under the NIRVIK scheme?
The ECGC settles claims under the NIRVIK scheme within a maximum of 30 days, subject to submission of all required documents.
- Can exporters apply for the NIRVIK scheme online?
Yes, exporters can apply for the NIRVIK scheme online through the ECGC website or offline by submitting the application form along with the required documents to the nearest ECGC branch office.
- How does the NIRVIK scheme encourage diversification of export markets?
The NIRVIK scheme provides credit insurance cover for exports to both traditional and non-traditional markets, which encourages exporters to diversify their export markets and reduce their dependence on a single market.