ECB Policy for 3G spectrum allocation
The Reserve Bank of India (RBI) vide RBI/2012-13/543 A.P. (DIR Series) Circular No. 114 dated June 25, 2013 has decided that External Commercial Borrowings (ECB) window for financing 3G spectrum Rupee loans which are still outstanding in telecom operator’s books of accounts, will be open upto March 31, 2014. Under the existing guidelines relating to ECB for spectrum allocation, the payment for spectrum allocation may initially be met out of the Rupee resources by the successful bidders, to be refinanced with a long term ECB, under the approval route, subject to the condition that ECB should be raised within 12 months from the date of payment of the final installment to the Government.
ECB for working capital under Civil Aviation Sector till 31st December, 2013
The Reserve Bank of India (RBI) vide RBI/2012-13/545 A.P. (DIR Series) Circular No. 116 dated June 25, 2013 has reviewed and decided that the scheme of availing of ECB for working capital for civil aviation sector will continue till December 31, 2013. It has been clarified by the RBI that availing of ECB shall be subject to the condition that all other aspects of the ECB policy shall remain unchanged.
Discontinuance of facility for availing ECB in Renminbi
The Reserve Bank of India (RBI) vide RBI/2012-13/546 A.P. (DIR Series) Circular No. 117 dated June 25, 2013 has reviewed the scheme of ECB in Renminbi (the official currency of the People's Republic of China) and decided that the scheme may be discontinued with effect from the date of issue of this circular.
Under the extant guidelines, Indian companies in the infrastructure sector are allowed to avail of ECB in Renminbi (RMB) under approval route subject to an annual cap of USD one billion pending further review. The RBI has mentioned that since the facility of ECB in Renminbi (RMB) had remained unused so far, it has decided to discontinue the same.
RBI Broadened the end uses of ECB
The Reserve Bank of India (RBI) vide RBI/2012-13/552 A.P. (DIR Series) Circular No.119 dated June 26, 2013 has decided to bring into force with immediate effect the modifications, that include the following as a part of import of capital goods by the companies for the use in the manufacturing and infrastructure sectors as permissible end uses of External Commercial Borrowings (ECB) under the automatic / approval route as the case may be applicable: (a) import of services;(b) technical know-how; and (c) payment of license fees.
The above shall however, be subject to the following conditions:
- There should be a duly signed agreement between the service provider and the borrower company;
- The original invoice raised by the service provider as per the payment schedule in the agreement should be duly certified by the borrower company;
- Declaration by the importer that the entire expenditure on import of services will be capitalised;
- Declaration by the importer that entire expenditure on import of services forms part of project cost; and
- AD category – I bank has to ensure the bonafides of the transaction
Further, all other aspects of the ECB policy, such as eligible borrower, recognized lender, end-use, all-incost ceiling, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements etc. shall remain unchanged.