ECB limits raised 10-fold to enable mining, exploration, refining companies to $500 million
08 October 2008
New Delhi: The finance ministry yesterday widened the scope of the infrastructure sector to include mining, exploration and refining sectors, to enable companies in these sectors a 10-fold rise in their external commercial borrowing (ECB) limits to $500 million a year from abroad for ruppe investments in India under the approval route.
Till now the infrastructure sector under the ECB policy covered power, telecommunication, railways, roads including bridges, sea ports and airports, industrial parks and urban infrastructure covering water supply, sanitation and sewage projects. In September, the foreign borrowing limit for companies in these sectors was raised to $500 million to cover their financing requirements for developing infrastructure.
Under the ECB route of borrowing from overseas, infrastructure companies borrowing over $100 million have to compulsorily spread the repayment over a at least seven years to ensure that only genuine long-term infrastructure developers borrow under this facility.
Apart from this, raising long-term finances has also become easier for companies in the mining, exploration and refining sectors, who can now borrow at 450 basis points above the six-month Libor.
All other aspects of ECB policy such as eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.
The finance ministry said the new amendment will become applicable on the day RBI notifies the change under the Foreign Exchange Management Act of 1999.