The NIRVIK scheme is also known as the Niryat Rin Vikas Yojana. It was introduced by the Finance Minister of India, Nirmala Sitharaman in the union budget for the fiscal year 2020-21 to help in the improvement of the condition of the export sector in the entire country. The union government agreed to implement this scheme under the export credit guarantee corporation of India, which offers credit support to all kinds of small-scale exporters in the country and reduces the amount paid by them in the form of insurance premiums to help them grow their business. Firstly, let's understand what the NIRVIK scheme is all about and its objectives.
Did you know? In December 2019, the export sector of India faced a large dip in the outbound shipment category and contracted for the fifth consecutive month at a rate of 1.9%.
What is NIRVIK Scheme?
The government of India incorporated the NIRVIK (Niryat Rin Vikas Yojana) scheme to offer insurance coverage to all kinds of small-scale exporters and provide credit guarantees to these exporters to help in the expansion of export trade throughout the nation. This scheme helps in the reduction of premium rates and increases the amount of insurance coverage for small-scale exporters.
Benefits of the NIRVIK Scheme
Despite these benefits, the NIRVIK scheme also wants the transformation of the major central export districts of India into export hubs. The government of India has introduced this scheme to fulfill a specific set of objectives.
The key benefits provided under the NIRVIK scheme are:
A scheme will assist small-scale exporters by increasing export volumes and allowing high credit disbursements.
NIRVIK scheme will provide every small-scale exporter with insurance coverage to help them to achieve rapid growth and expansion in their business.
Small-scale exporters will have to pay a lower amount of insurance premiums thanks to the NIRVIK scheme introduced by the government of India.
This scheme will help in the process of streamlining and simplifying the claim settlement process, helping exporters to devote their valuable time towards the growth of their business.
The main objective behind the introduction of the NIRVIK scheme by the Indian government is to ensure a sense of healthy business and work environment prevails. This will increase job opportunities in the nation.
Features of the NIRVIK Scheme
The NIRVIK scheme has its own distinctive set of features, which are as follows:
Insurance coverage will account for up to ninety per cent of the principal amount and interest.
The insurance coverage will ensure that the credit interest rates are well below 4%. In addition, export credit interest rates for the rupee will be limited to 8%.
Under the NIRVIK scheme, both pre and post-shipment credit will be a vital part of the new scheme.
Those involved in the borrowing of jewellery, gems and diamonds of an amount exceeding ₹80 crores will have to incur a higher premium rate than those from other sectors as the loss ratio is considerably high.
Those accounts which are involved in dealing within the maximum limit of ₹80 crores will have to bear interest up to 0.60 per annum and those exporters whose limits are much higher than ₹80 crores will have to bear interest of 0.80 per annum.
In the event of losses exceeding 10 crores in value, the exporter must undergo an inspection by the export credit guarantee corporation of India (ECGC). The bank, in the meantime, will pay the monthly premium to the ECGC and the interest amount will be deemed to be outstanding.
Reasons to Register for the NIRVIK Scheme
If you are considering joining the NIRVIK scheme, you are doing the right thing because it comes with many benefits.
Check the points below to find you:
Affordable Interest Rates
Exporters, be they small-scale or large-scale, can apply for any kind of business loan under this scheme at a fixed annual interest rate of 7.6% per annum, which is affordable and manageable for exporters.
Lower Rate of Insurance Premiums
The rates for insurance premiums for all types of accounts with a maximum limit of ₹80 crores have been kept at 0.60% per annum and for accounts that have a maximum limit of over ₹80 crores are kept at o.80% per annum, which is considered as considerable marginal.
Higher Coverage Ratio
Exporters of all sizes- whether small or large- are guaranteed insurance coverage equivalent to 90% of the principal amount and the amount of interest included in the principal amount, under this scheme.
Lower Rates of Forex
Exporters will greatly benefit under the NIRVIK scheme since the foreign exchange rate is kept between 4% and 8%, or sometimes even less, to benefit exporters and help them to expand their businesses.
Eligibility Required to Apply for the NIRVIK Scheme
To avail of the NIRVIK scheme, exporters need to ascertain whether they are eligible to apply for this scheme or not. The eligibility requirements for the NIRVIK scheme are as follows:
The scheme can only be availed of by small-scale businesses.
The owner of the export business must be a citizen of India.
Export businesses must have an active bank account in India.
Documents Required to Apply for NIRVIK Scheme
If as an exporter you are eligible to apply for the scheme, you will be required to furnish the following documents along with your application:
Valid Identity Proof
Whether the company involved in export is a partnership firm or is owned by one single individual, identity proof is a necessary document. This can be either an Aadhar card, passport etc.
Business Registration Document
This involves all kinds of business-related documents that prove that your business is legitimate and you are the legitimate owner of the business.
Business PAN Card
The owner of the business will be required to furnish a PAN card which is under the name of the export company. Without this, you will not be qualified to apply for the scheme.
GST Certification of the Business
Every type of small-scale exporter needs to obtain a goods and services tax (GST) certification from the relevant GST council to be eligible to apply for the NIRVIK scheme.
Various Kinds of Insurance Documents
Small-scale exporters eligible for the scheme will be required to furnish all essential documents related to the insurance policies of the business owner and the export company.
All Kinds of Bank Loan Certificates
After furnishing all the relevant documents stated above, in the end, small-scale exporters will be required to furnish documents related to loans taken from a bank if the exporter has an active and running bank loan.
This was all about what is the NIRVIK scheme, its objectives, features, benefits and the eligibility requirements to apply for the scheme. It also covered the documentation required to apply for the NIRVIK scheme. We hope the information shared in this blog will help readers better understand the meaning and the constituents of the NIRVIK scheme, introduced by the Indian government.
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