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MIGA targets SMEs

Special Correspondent

Provides insurance cover for political risks faced abroad

CHENNAI: The Multilateral Investment Guarantee Agency (MIGA), an affiliate of the World Bank which covers the political risks faced by investors in host countries, is targeting the small and medium enterprises (SMEs) of India for extending its service.

India has emerged as the 14th largest overseas investor among developing countries and coverage of MIGA has become all the more relevant to Indian businesses investing abroad, according to Nabil Fawaz, Global Head-Agribusiness, Manufacturing and Services of the agency.

Political risks covered by MIGA include restrictions imposed by governments on transfer of currency and convertibility, nationalisation and confiscation, "creeping expropriation", partial expropriation, war and civil disturbance and breach of contract by host country authorities.

Making a presentation on the Small Investment Program (SIP) of MIGA, which offers simpler and comprehensive insurance package compared to the normal cover available to big investors, Mr. Fawaz said the SIP excluded only breach of contract. Small investments (which could be by big companies too) had been defined with reference to three criteria, out of which at least two would have to be fulfilled.

He clarified that regulatory risk was covered only in cases where restrictions were targeted in a discriminatory manner against individual countries or companies or projects.

MIGA, whose "owners" include more than 160 members of the United Nations (only about twenty nations, most of them island States, are not members) imparted through its coverage of overseas investments confidence of creditors in individual projects, Mr. Fawaz said. He disclosed that MIGA was considering coverage of "temporary business disruptions" which had become common among hotel and agribusinesses in conditions of war and civil strife.

K. Muthukumaran, General Manager, Exim Bank of India, said that following the recent amendment to the Exim Bank Act, it had identified textiles, pharmaceutical, chemical biotechnology, information technology and auto components sectors for equity participation.

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