The Hindu Business Line : ECB cap may be raised

Fixing the limit
For 2006-07, the overall limit for ECB, which is usually fixed annually, has been pegged at $18 billion. Within this limit, entities can avail ECBs through automatic route or approval route.

New Delhi , Sept. 30

The Finance Minister, Mr P. Chidambaram, has indicated that the Government may raise the overall external commercial borrowing (ECB) limit in the coming months to enable corporates to access low-cost funds from abroad.

"This (ECB) is constantly under review. At an appropriate time, we may have to look at the cap. At the moment, we are in the middle of the year. Let us see. We may have to raise the cap", Mr Chidambaram said, when asked whether the Government would raise the overall limit on ECBs.

For 2006-07, the overall limit for ECB, which is usually fixed annually, has been pegged at $18 billion. Within this limit, entities can avail ECBs through automatic route or approval route. Corporates can avail ECB up to $500 million per financial year under automatic route.

Raising low-cost funds

The Finance Minister pointed out that raising low-cost funds was still an issue for many in the manufacturing sector. "If they are able to raise low-cost capital in India and abroad, there will be more capital invested in manufacturing. At present, only the top business houses are putting money into manufacturing. We need this to be across the board, from the large to the small and medium enterprises," he said.

The Tarapore Committee on Fuller Capital Convertibility has also recommended that the overall limit should be raised gradually even while suggesting that the cap of $18 billion and the automatic approval limit of $500 million be retained for 2006-07.

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