Officials told Business Standard the account would be managed by the Export Credit Guarantee Corporation of India and the Exim Bank. The comfortable foreign exchange reserves of over $100 billion could be leveraged to set up the account, they said.

The Plan allocation for ECGC was increased by Rs 40 crore (Rs 400 million) to Rs 100 crore (Rs 1 billion) in the Budget. The authorised capital of the Exim Bank will be gradually enhanced over the next few years so that it can extend lines of credit of up to $1 billion.

At present, the Exim Bank has a paid-up capital of Rs 649.9 crore (Rs 6.5 billion) against an authorised capital of Rs 1,000 crore (Rs 10 billion). Sources said Commerce and Industry Minister Kamal Nath would take up the issue of expanding the role of ECGC with Finance Minister P Chidambaram.

"At present, the role of ECGC is restricted to covering non-payment to exporters on account of credit risk. The ministry is arguing that the role should be expanded to cover political risks. In order to do this, ECGC should be given separate seed money," an official said.

The proposal, likely to be taken up by the Cabinet this month, will help mitigate the risks of companies undertaking projects in countries like Iraq. "At present, India has a less than 1 per cent share in the $50 billion global project exports market. India can target at least a 10 per cent share," an official said.

L&T, EIL, RITES, EPIL and Bhel account for over 70 per cent of India's project export contracts in value terms and 50 per cent by volume. "If India has to compete with countries like China, Brazil and South Korea in project exports, it should have the ability to undertake billion-dollar projects," officials said.

Cheer for exporters

• The government is planning to set up a national export insurance account
• The account will be managed by the Export Credit Guarantee Corporation of India and the Exim Bank
• The capital of Exim Bank will be raised so that it can extend lines of credit of up to $1 billion