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A. P. (DIR Series) Circular No. 26 dated 11th September, 2012 External Commercial Borrowings (ECB) Policy – Repayment of Rupee loans and/or fresh Rupee capital expenditure – $ 10 billion scheme
October2012
A. P. (DIR Series) Circular No. 26 dated 11th September, 2012 External Commercial Borrowings (ECB) Policy – Repayment of Rupee loans and/or fresh Rupee capital expenditure – $ 10 billion scheme
By Gaurang Gandhi, Chartered Accountant
Reading Time 2 mins
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Presently, an Indian company in the manufacturing and infrastructure sector, which has consistent foreign exchange earnings during the last three years ,can avail, under Approval Route, ECB up to 50% of the average annual export earnings realised during the past three financial years (within the overall of ECB ceiling of INRNaN billion) for repayment of Rupee loan(s) availed of from the domestic banking system and/or for fresh Rupee capital expenditure, provided the companies are not in the default list/ caution list of the Reserve Bank of India. This circular has modified the above facility as under: –
(a) An Indian company in the manufacturing and infrastructure sector, which has consistent foreign exchange earnings during the last three years can avail ECB; i. upto 75% of the average foreign exchange earnings realised during the immediate past three financial years; or ii 50% of the highest foreign exchange earnings realised in any of the immediate past three financial years, whichever is higher.
(b) A Special Purpose Vehicles (SPV), which have completed at least one year of existence from the date of incorporation and do not have sufficient track record/past performance for three financial years, can avail ECB upto 50% of the annual export earnings realised during the past financial year.
(c) The maximum ECB that can be availed of by an individual company or group, as a whole, under this scheme is INRNaN billion.
