New Delhi, Dec 26 (IANS) The government Friday announced allocation of Rs.3.5 billion (Rs.350 crore) to the state-run Export Credit Guarantee Corp of India Ltd (ECGC) for providing higher risk cover to micro, small and medium exporters (MSME).The Cabinet Committee on Economic Affairs gave its approval for allocation of the amount that will increase the risk cover to the MSMEs from 85 percent to 95 percent.

Banks financing such MSMEs would now be able to provide continued financing, even if losses occur in one or two transactions, by the provision of higher risk cover that would be made available to them under the Export Credit Insurance Scheme for Banks operated by ECGC, the government said in a statement.

At present, the Scheme provides 75 percent risk cover for banks, which will now be enhanced to 85 percent for the MSME exporters.

In case of non-MSME sector, the additional 10 percent support will be limited to textiles (including handicraft and handlooms), gems and jewellery, leather, engineering products, carpets, project goods, auto components and chemicals.

Exporters have been in a quandary over decline in export orders, cancellation of pro-forma invoices, re-negotiation of orders and prices by buyers that resulted in a slowdown in export realisation.