Now,India Inc can borrow $1 bn in yuan

ECB limit for automatic route increased from $500 million to $750 million.

Concerned over the slowing of investment in the economy due to rising cost of credit,the government today allowed companies to raise debt in Chinese yuan and also borrow more from the overseas market.

The move is likely to help Indian firms,suffering under the high interest rates regime,to raise cheaper funds abroad. The investment sentiment has been bruised with the central bank hiking key policy rates 11 times in the past 18 months.

For the first time,the government allowed companies to borrow in yuan through External Commercial Borrowing (ECB) under the approval route up to $1 billion. The overall limit remains $30 billion,economic affairs secretary R Gopalan said today. India Inc had earlier asked the government to relax the ECB norms given the high cost of borrowing in the country.

Story continues below this ad

The move is likely to help power sector companies in a big way,as they have placed large orders for power equipment with the Chinese vendors. The cost of borrowing from China is much less as compared to India,the secretary said.

Till now,India only allowed overseas borrowing in US dollar,euro,Japanese yen and British pounds.

The government,at a high-level committee meeting today,also decided to increase the ECB limit for automatic route (without RBI approval) from the current $500 million to $750 million across sectors.

The government also increased the limit for the service sector via automatic route to $200 million from the current $100 million while the limit for NGOs has been increased to $10 million from the current $5 million.

Story continues below this ad

Further,the government also allowed firms to refinance their rupee debt of all maturities through overseas borrowing. However,75 per cent of the new funds raised will have to be invested for financing a new project and the remaining 25 per cent can be used for refinancing the debt.

Refinancing of buyers and suppliers credit through ECB was also allowed but only for infrastructure sector and capital goods. Until August,corporates have raised $15.93 billion through ECBs in the current fiscal from the overall ceiling of $30 billion,the secretary said,adding that if there is a need for additional money through the ECB for infrastructure,the government may consider raising it.

The relaxation in ECB norms is also likely to help arrest the fall in rupee,currently at Rs 47.55 against US dollar.

New norms for ECB

For the first time,firms have been allowed to borrow up to $1 billion in yuan through ECB under the approval route. The overall limit is $30 billion

Story continues below this ad

The move is likely to help Indian firms,suffering under the high interest rates regime,raise cheaper funds abroad

Till now,India only allowed overseas borrowing in US dollar,euro,Japanese yen and British pounds

The police said that Kumar, a resident of Turbhe MIDC in Navi Mumbai, was driving his concrete mixer truck when it collided with an SUV.

‘Unleashed aggressive dog to stop probe’: Sacked IAS officer Puja Khedkar’s mother booked

Cities5 hr ago

The mother of a dismissed IAS officer, Manorama Khedkar, has been booked by the police for obstructing an investigation and aiding suspects involved in a road rage incident. The incident occurred on September 13 and involved two men who allegedly kidnapped a truck helper.

View all shorts

Live Blog