Govt offers Rs 497 crore package to help exporters with insurance

NEW DELHI: The commerce department on Thursday announced RELIEF - Resilience & Logistics Intervention for Export Facilitation - scheme, a Rs 497 crore package to help exporters with insurance support to navigate the challenge posed by the conflict in the Persian Gulf.

Govt officials said more steps are on the anvil, with the finance ministry and RBI working on relief from banks, besides insurance for ships through a Protection and Indemnity (P&I) club as war risk premium for vessels has soared.

"There have been instances where the exports, which were meant for some of the countries in West Asia have not been able to reach their destinations. Future exports are also getting impacted. There is a sense of worry in exporters, especially among those who have exposure to the West Asian markets," commerce secretary Rajesh Agrawal said.

He said due to the conflict, there was some impact on the trade environment and exporters are facing certain challenges, with a "sense of worry", particularly among those with exposure to Gulf region.

Several ships are stranded and many of them have returned, known as back to town in trade parlance, due to the closure of the Strait of Hormuz. Agrawal said that an inter-ministerial group is meeting daily and working to address the concerns flagged by exporters.

The package announced Thursday, with a strong focus on small businesses, will also see govt shell out funds to help exporters, who did not purchase a cover from Export Credit Guarantee Corporation (ECGC) and dispatched their goods to the Gulf region between Feb 14 and March 15. RELIEF will cover containers, partial containers and refrigerated ones headed to the UAE, Saudi Arabia, Kuwait, Qatar, Oman, Bahrain, Iraq, Iran, Israel and Yemen. In this case 100% insurance will be provided.

For goods where the onboard bill of lading is issued between March 16 and June 15, war risk and other political risks are covered, without any increase in premium beyond the pre-conflict level. ECGC can enhance the coverage from 75-80% to 95% of the loss, with govt reimbursing the excess cost. In this case back to town cases will be excluded.

Govt has capped the coverage per exporters at Rs 50 lakh to ensure that the focus remains on MSMEs, with the money being made available from the Export Promotion Mission.

"It is an effort to alleviate some of the pain for exporters, with govt bearing a part of the cost. The energy supply chain will have its own impact on production, which is being addressed separately," Agrawal said.

Ready to Make a Smarter Property Decision? Build Your Legacy with TOI Homes.