India Inc has stepped up raising resources from overseas and has mopped up $2.78 billion through external commercial borrowing (ECBs) route in September, industry body Assocham said.

After two months of low key activity in June and July when it raised $1.99 billion and $1.07 billion, the month of August and September saw significant rise in such fund mop up. In August India Inc raised $2.37 billion and in September it stood at $2.78 billion.

“A large gap in the lending rates between the domestic and overseas resources is forcing India Inc to look abroad for funds. This only reinforces our long—pending demand for a low interest rates regime within the country,” Assocham President Rajkumar N Dhoot said.

According to the Assocham analysis, despite a sharp depreciation in rupee value against the US dollar, raising debt in the overseas market still works out cheaper.

In September, out of 86 ECBs, 18 were for meant for raising resources for modernisation of operations, 17 for new projects and 15 for import of capital goods.

Assocham said the recent policy changes insofar as the ECBs are concerned are proving helpful.

As per the revised guidelines, an entity can go in for the ECBs up to 75 per cent of the of the average foreign exchange earnings in the immediate past three years or 50 per cent of the of the highest forex earnings in any of those three years, whichever is higher.

Related Topics