ECGC was set up in 1957 by the central government to strengthen the export promotion drive by covering the risk of exporting on credit. Today, ECGC provides a range of services in addition to the core activity of credit insurance. These include export credit insurance cover for banks financing exporters, enable project exports covers, investment insurances, factoring ,etc. ECGC has also evolved schemes to protect the lending banks from certain risks of non-payment. These covers take the form of an agreement between the lending bank and ECGC and are issued on a case to case basis. Today, ECGC is the fifth largest credit insurer of the world in terms of coverage of national exports.

In the present era of globalization, trade knows no boundaries and has become global. In fact, foreign trade is playing a very important role in the economic, social, political and cultural development of nations. Foreign trade consists of two distinct wings, i.e., exports and imports. Both are equally essential and significant. Export constitutes a vital element of any nation's economic activity. It occupies a very important position in the economic development of a country. It adds to the growth factor that benefits the exporting country immensely. However, the emerging global scenario has brought both challenges and opportunities for Indian exporters. In conducting their overseas transactions, exporters face all sorts of risks, like credit risk, supply risk, exchange risk, demand risk, market risk, etc.

With increasing competition in international trade, exporters have to compete, not only in terms of quality, price, delivery schedule and service, but also on payment terms. They are increasingly required to supply trade credits over a much longer period. This greatly increases the financial risks of exporting, as payments for export transactions are open to risks, even at the best of times.

There are many risks involved in trading with overseas buyers on credit terms. These risks may be commercial, as well as political risks. Such risks have assumed large proportion today because of the major political and economic changes that are sweeping the international markets. The overseas buyers may not accept exporters' commodities or may become insolvent or default on payment. There may be an outbreak of war, earthquake or a revolution in the buyers' country, which may block the payment. There may be an import restriction or cancellation of a valid import license, which may prevent goods to be accepted or paid for. In all such circumstances, the exporters' money might be blocked and they may face difficulty in conducting their business. Due to political and economic uncertainties, the loss of a large payment may spell disaster for any exporter, whatever may be his competence.

However, if the exporter adopts a very cautious approach in selecting the overseas trade partners and in choosing the business deals, he might lose out on opportunities. Due to these obstacles, many times exporters might face risks in selling overseas. They might consider doing domestic business safer than conducting business overseas.

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