Indian firms raised USD 3.7 bn in August through ECBs, FCCBs

Indian firms raised USD 3.7 bn in August through ECBs, FCCBs

Around 70 companies raised over USD 2.68 billion for various projects through the automatic route, which does not require RBI's or the government approval.

Another USD 1.02 billion were raised through the approval route, according to latest Reserve Bank data. Auto giant Tata motors alone raised USD 500 million through ECBs for its rupee expenditure.

Similarly, state-owned Steel Authority of India Ltd mopped up USD 500 million in two tranches through ECBs during the month for modernisation of projects. Electrosteel Castings raised USD 200 million for the same purpose.

Corporates, registered under the Companies Act, 1956, were earlier allowed to access ECBs up to USD 500 million in a financial year under the automatic route. The ECB, which is not covered by the automatic route, is considered under the approval route on a case-by-case basis by the Reserve Bank.

However, last month the government raised the limit of external borrowings, with tenure of 5 years or more under the automatic route, to USD 750 million. For the services sector, the ECB limit under the automatic route was doubled to USD 200 million and for NGOs from USD 5 million to USD 10 million.

ECBs are used as an additional source of funding by Indian corporates to augment resources available domestically. FCCBs are also governed by norms similar to ECBs.
Other major fund raisers in August were Idea Cellular - USD 150 million, and Bhushan Steel - USD 135 million in three tranches for various project.

Under the approval route in August, national carrier Air India and private firm Spice Jet raised raised USD 366 million and USD 270 million, respectively, for import of capital goods.

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