Niryat Rin Vikas Yojna, better known as the NIRVIK scheme, was introduced to ease the struggles of small-scale exporters in India.

In December 2019, India's export sector had witnessed a sharp dip in outbound shipment and contracted for a fifth consecutive month by 1.8%. Given the steeply declining numbers indicating India's low export performance, the Finance Minister introduced the NIRVIK scheme. The scheme has been taking shape under India's Export Credit Guarantee Corporation (ECGC).

Alternatively known as the Export Credit Insurance Scheme (ECIS), this program primarily aims at increasing credit availability and disbursement for Indian exporters.

What is the NIRVIK Scheme for exporters of India?

The Indian government instituted the NIRVIK scheme to offer insurance cover to small-scale exporters. At its core, the scheme offers two key benefits:-

  • Reduced premiums
  • Increased insurance cover

The insurance guarantee is particularly beneficial since the percentage of insurance cover has now increased to 90% from the previous cap of 60%. Besides these features, the scheme also eases the process of securing claims and settlements.

Moreover, the NIRVIK scheme also proposes the transformation of India's central export districts into export hubs. This objective is closely linked with the government’s aim of providing more lucrative growth opportunities to exporters.

Aim of NIRVIK Scheme

The government of India introduced the NIRVIK scheme to fulfill the following primary objectives:-

  • To improve the state of funds available to small exporters in the country.
  • To offer a higher insurance cover for exporters to help them expand their business.
  • To simplify and expedite the claim settlement procedure.
  • To lower the insurance premium amount for the betterment of small exporters.
  • To help increase the quantum of exports done by small exporters through high credit disbursement.
  • To protect the exporters against heavy losses with a 90% cover guaranteed on their credit.

Who is eligible to apply for the NIRVIK scheme?

One should consider the following three eligibility criteria before applying for this centrally sponsored scheme.

  • Only small-scale exporters can apply for the scheme.
  • The applicant must be an Indian citizen who owns an export business.
  • The applicant must be an exporter with a bank limit of under ₹80 crores.

Features of NIRVIK Scheme

The NIRVIK scheme aims to boost the country's export sector and fuel India's economy. Here are some of the key features outlined in this program:-

  • The scheme is expected to run for five successive years since its launch in 2020.
  • An individual can apply for loans from any well-known financial institution. It also introduces an easy and seamless credit application procedure.
  • The government offers up to 90% coverage on both the principal amount and interest to protect the exporters against possible losses.
  • The foreign export credit interest is set at a minimal rate of 4%. The rate of rupee export credit interest is fixed at 8%.
  • Small exporters can secure business loans at a competitive interest rate of 7.6% per year.
  • The insurance premium has been reduced from 0.72% to 0.60% for exporters with a bank limit of under ₹80 crore.
  • The scheme applies for both post and pre-shipment credit.
  • A higher premium rate is offered to borrowers from the jewelry, diamond, and gems industries with a bank limit higher than ₹80 crores since the loss ratio in these industries is significantly higher.
  • The ECGC will inspect any exporter who loses more than ₹10 crores and takes steps to cover the outstanding amount (both principal and interest).

Benefits of NIRVIK Scheme

Small-scale exporters lie at the forefront of the NIRVIK scheme. The program aims to enhance accessibility, offer greater liquidity, and protect the financial interests of these businesses.

Listed below are the advantages/benefits of the NIRVIK scheme:-

  • The scheme offers capital relief with low credit costs and protects exporters against the risk of non-payment.
  • It empowers small-scale exporters to grow their business and transform into large-scale exporters.
  • The domestic and foreign exchange rates are fixed under 8% and 4%, respectively.
  • It allows for instant claim settlements, ensuring better liquidity.
  • It offers constant and consistent availability of working capital for the functioning of the business.
  • It encourages credit loans with better tax reimbursements and lower insurance costs to ensure greater productivity.
  • It helps small exporters grow on par with big domestic and international market players.
  • It removes complex procedures and red-tapism or bureaucracy to cultivate an exporter-friendly environment.

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How to apply for NIRVIK Scheme?

The NIRVIK scheme, at its core, encourages small exporters to take more risks while the government offers them financial protection. To avail for this scheme, exporters need to keep ready an array of documents, which were briefly mentioned in the Budget speech when the scheme was announced in 2020.

Documents required for NIRVIK Scheme

To opt for the NIRVIK scheme, an exporter may be obligated to furnish the following documents with their application:-

  • Identity Proof: Whether the exporting company is a partnership firm or owned by a single individual, identity proof is a crucial document. This can be an Aadhar card, passport, or similar such documents.
  • Business Registration documents: This includes all official business-related documents that prove you are the legitimate owner or representative of your export business.
  • Business PAN card: A PAN card under the name of the export organization is another mandatory requirement without which you will not be qualified to apply for the scheme.
  • GST certification: Every small-scale exporter must obtain a Goods and Services Tax (GST) certificate from the GST Council.
  • Insurance documents: Exporters need to submit all papers related to their insurance policies.
  • Bank Loan certificates: If you have a running bank loan, you must hand in relevant documents for your loan(s).

NIRVIK Scheme - Key Details

Although we’ve already covered the key features of the NIRVIK scheme, here are some key details relevant to the scheme.

  • The scheme offers higher insurance coverage of up to 90%. The insurance cover is also applicable to customer banks.
  • The insurance covers the overhead principal amount and unpaid interest rate for about two quarters or till the NPA date, whichever comes first.
  • The scheme will run for five successive years and supports exports worth ₹30 lakh.
  • The scheme aims to provide higher credit export disbursements with a more straightforward claim settlement procedure.

FAQs on NIRVIK Scheme

1. What are the benefits for the enterprises under this scheme?

Under this scheme, ECGC refunds about 90% of the loan amount (principal and interest) to the banks if the enterprise suffers any loss.

2. For how many years will the scheme be in existence?

The NIRVIK scheme is presumed to run five years.

3. Apart from exporters, who all are covered under this insurance scheme?

Besides small exporters, Micro, Small, and Medium Enterprises (MSMEs) are also under the ambit of this insurance scheme. They will enjoy improved ease of doing business and simple ECG procedures.

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