To enable Indian companies access cheaper funds abroad, the Union government might further ease the norms for raising funds through the external commercial borrowing (ECB) window, particularly for low-cost housing and infrastructure sectors like telecom and ports.
The Union Finance Ministry and Reserve Bank of India (RBI) officials are likely to meet this week to consider relaxation in ECB norms for these sectors, to streamline capital flows into the country, at a time when the widening current account deficit (CAD) has become a reason for the government’s worry.
A Finance Ministry official said that ECB liberalisation takes care of financing of deficit. The government will have a meeting shortly to consider relaxing the norms, the bureaucrat said. Under the ECB route, borrowers can raise dollar-denominated loans directly from international banks, international capital markets, multilateral financial institutions like IFC and ADB, export credit agencies, suppliers of equipment, foreign collaborators and foreign equity holders.
For low-cost housing an ECB window of $1 billion was made available n December 2012. Though there are two views on whether or not the limit should be increased this year — since it was set only in the latter part of last year — the government might relax some conditions for availing of credit through the ECB window.