Small exporter’s policy (SEP) under ECGC
India has a large number of SMEs, which also export overseas It is estimated that 35 to 40% of India’s exports come from MSMEs. In order to fulfill the requirement of these small scale exporters, a variant of the standard policy, known as small exporter’s policy-SEP has been designed by ECGC.
SEP has all features of the standard policy incorporating certain improvements in terms of cover in order to encourage small exporters to obtain and operate the policy. SEP is issued to exporters whose anticipated export turnover for the coming one year is not more than 5 CRORE.
ECGC has fixed the maximum liability under SEP, and it should not exceed Rs 2 CRORE.
The coverage of various risks under SEP is similar to that of standard policy. The period of SEP is 12 months, and the minimum premium to be paid at the time of availing policy is Rs 5000. Which shall be adjusted for the premium of the shipments. No Claim Bonus (NCB), in the premium rate, is granted every year at the rate of 5%.
An exporter needs to declare the shipment executed on a monthly basis to ECGC. Further, small exporters are required to submit monthly declarations of all payments remaining overdue by more than 60 days from the due date, as against 30 days in case of exporters holding the standard policy.
An exporter can lodge a claim in case of non payment, 60 days after the due date of payments. ECGC can allow change in terms of payment by extending the credit, if Small exporters are confident of getting payment from overseas buyer with some delay.
SEP is flexible to the dynamic needs of low value merchants. For example, a small exporter may without prior approval of ECGC, Convert a D/P bill into a D/A bill provided that he or she has already obtained suitable credit limit on the buyer on D/A terms.
Further, it conditioned that in cases where the value of this bill is not more than 3 lakh, a conversion of D/P bill into D/A bill is permitted, even if the credit limit on the buyer has been obtained on D/P terms only. But such claim can be considered during the policy, on account of losses arising from such conversions.
Small exporters are the most stressed and have limited knowledge and expertise in dealing with international payment realizations. Accordingly, it is allowed that a small exporter may, without the prior approval of ECGC, can extend the due date of payment of a D/A bill, provided that a credit limit on the buyer on D/A terms is in force at the time of such extension.
In cases where the importer has refused to take ownership of the cargo and pay at sight D/P, a small exporter can sell the cargo to alternate buyer without obtaining the prior approval of ECGC, even when the loss exceeds 25% of GIV.
ECGC may consider the payment of claims up to an amount considered reasonable, provided that ECGC is satisfied that the exporter does his best under the circumstances to minimize the losses. Other conditions are the same as the standard policy of ECGC.