ECBs relaxed to enhance revenue routes

By Sawant Singh, Ameya Khandge and Arun Madhu, Trilegal
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Over the last few months, the Reserve Bank of India (RBI) has introduced key relaxations to the exchange control policy governing external commercial borrowings (ECBs) raised by Indian entities. ECBs have emerged as an important resource-raising avenue for Indian corporates, particularly with rising interest rates in the domestic financial markets. Liberal policy changes on this account are therefore bound to find favour with India Inc.

Ameya Khandge, Trilegal
Ameya Khandge
Trilegal

The changes were introduced through three circulars dated 29 May 2008, 2 June 2008 and 11 July 2008.

End use and all in costs

The first relaxation relates to capital expenditure in rupees. At present, borrowers proposing to raise ECBs up to US$20 million for permissible rupee expenditure require prior approval from the RBI.

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