NIRVIK Scheme – Eligibility, Application Process, Benefits

The NIRVIK Scheme (also known as Niryat Rin Vikas Yojana) is a scheme run by the Export Credit Guarantee Corporation of India (ECGC) to help small-scale exporters get loans and improve credit availability. The Finance Minister announced the NIRVIK Scheme during the Union Budget for 2020-2021 on February 1st, 2020, which will help the Indian economy’s export sector. The linked article contains a full list of Indian government schemes.

Discussion :

The NIRVIK Scheme aims to provide exporters with high insurance coverage while lowering premiums for small-scale exporters. It is expected that such a step will result in a higher disbursement of export credit. The scheme was announced when outbound shipments in 10 of the 30 exporting sectors were on the decline in 2019. India’s exports declined by roughly 1.8 percent to USD 357.39 billion in December 2019, leaving a trade imbalance of USD 118.10 billion for the sixth month in a row.

The NIRVIK Scheme was developed in response to exporters’ concerns regarding loan availability. Credit disbursement fell to Rs 9.57 lakh crore in 2018-2019 from Rs 12.39 lakh crore the previous year. The insurance guaranteed under the scheme, also known as the Export Credit Insurance Scheme (ECIS), may cover up to 90% of the principal and interest. The Ministry has also recommended subsidizing the premium paid by exporters of certain key sectors under the plan. The Export Credit Guarantee Corporation currently offers a credit guarantee of up to 60% loss. The development is significant since exporters have expressed concerns about loan availability. 

The Commerce and Industry Ministry is working on the scheme. The insurance guarantee under the scheme, also known as the Export Credit Insurance Scheme (ECIS), may cover up to 90% of the principle and interest. The Ministry of Commerce and Industry has also proposed subsidizing the premium paid by exporters of certain important sectors under the scheme. Due to the greater loss ratio, gems, jewelry, and diamond (GJD) industry borrowers with a ceiling of more than Rs. 80 crore will have a higher premium rate under the NIRVIK Scheme than non-GJD sector borrowers in this category, according to Commerce and Industry Minister Piyush Goyal.

Currently, the Export Credit Corporation offers a credit guarantee of up to 60% loss. The development is significant since exporters have expressed concerns about loan availability. In December 2019, India’s exports fell 1.8 percent to USD 27.36 billion, while imports fell 8.9 percent to USD 357.39 billion, resulting in a trade imbalance of USD 118.10 billion.

Eligibility:

Individuals may want to examine the following eligibility requirements before applying:

● Small exporters are the only ones qualified to apply for and get rewards under this government-sponsored program. This scheme is open to Indian people who operate a firm that exports.

● Individuals having a bank account limit of fewer than 80 crores will be able to take advantage of this insurance scheme’s cheap premium cost.

Application Process:

The NIRVIK Scheme’s start date has yet to be determined. As a result, there are no specifics on how exporters can register for and benefit from this scheme. Now that a person knows if he is eligible for the NIRVIK Scheme, he might also want to know what documentation he will need in the future to make a smooth application.

Documents needed for the Application Process:

A list of documents anyone will need to provide if they choose this option –

● Documents for Business Registration: Regardless of the type of export agency, you must give all official documents to prove that you are a real company owner.

● For a successful NIRVIK registration, small exporters must receive a GST certificate from the Goods and Services Tax Department.

● An exporter cannot apply for this plan unless he or she has a business PAN card in the company’s name.

● Identity Proof: Whether an export company is owned by a partnership or a single individual, identity proof such as Aadhaar must be submitted throughout the application process. 

● Bank Loan Certificates: If you’ve taken out a bank loan, you’ll need to provide the loan documentation for verification.

● Insurance Paperwork: Potential small exporters must provide all insurance-related documents to claim advantages under this scheme.

Features:

● Insurance will cover up to 90% of the debt and interest.

● Thanks to the expanded coverage, foreign export credit interest rates will be kept below 4%. Interest rates on rupee export credit will be limited to 8%.

● The new program would include both pre and post-shipment credit.

● Borrowers from the gems, jewelry, and diamond industries with a credit limit of more than Rs 80 crore would pay a higher premium rate than those from other industries due to the high loss ratio.

● Premium rates would be reduced to 0.60 percent for accounts with limits less than Rs. 80 crore. The charges would be 0.72 percent per annum for customers whose limits exceed Rs. 80 crore.

● The exporter will be subjected to inspection by the ECGC if losses reach Rs. 10 crores. Banks will regularly pay a premium to the ECGC as the principal and interest for both outstandings are covered.

Several SMEs, MSMEs, and the Gems, Jewellery, and Diamonds (GJD) sectors benefit from the NIRVIK scheme, increasing loan availability and simplifying the lending process. This scheme was established by the Government of India (GOI) to increase export output and provide assured insurance coverage for pre and post-shipment credit. In light of this, let’s take a look at some of the scheme’s financial advantages.

Benefits of the scheme:

The following are some of the advantages of the Niryat Rin Vikas Yojana scheme to be aware of:

● Capital relief lowers credit costs.

● Under this program, exporters can gain quick access to financing.

● It has increased liquidity due to fast claim settlements and the constant availability of working capital for export production.

● This program enables Indian exports to compete in both domestic and international markets.

● Boosting production and credit loans offers lower insurance expenses and tax reimbursements.

● The plan assures that the international and domestic currency rates remain below 4% and 8%, respectively.

● Under this program, exporters can grow their small-scale firms into large-scale enterprises.

● Non-payments are reduced as a result of the scheme.

● The NIRVIK Scheme will be critical in boosting exporters’ access to and affordability of loans, making Indian exports more competitive.

● To become exporter friendly, it will eliminate red tape and other procedural barriers. With factors like capital relief, better liquidity, and quick claim settlement in play, the extended insurance coverage is projected to lower the cost of borrowing.

● MSMEs (Micro, Small, and Medium Enterprises) will also benefit from the increased ease of doing business and the simplification of ECG procedures.

Conclusion:

The new plan called NIRVIK was launched to increase export credit disbursement by providing high insurance coverage, lower premiums for small exporters, and simpler claim settlement procedures. This will ensure that the exporters have more autonomy in carrying out their businesses. The future of this scheme will determine the autonomy of the exporters and is a scheme to keep an eye on.