The Hindu : National : ECB norms eased further to include services sector

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ECB norms eased further to include services sector

Special Correspondent

It can garner up to $100 million

NEW DELHI: In a further policy relaxation of the external commercial borrowing (ECB) guidelines, the government on Saturday threw open the overseas funding facility to the services sector under the approval route.

According to a Finance Ministry statement here, borrowers in the services sector such as hotels, hospitals and software companies can henceforth avail of the ECB route to garner up to $100 million (about Rs. 400 crore) for the import of capital goods on the basis of case-by-case approvals.

Hitherto, services sector companies were not eligible for tapping overseas funds through the ECB route.

The amendments in the ECB Policy, the statement said, would come into force on the date of Notification of Regulations/directions issued by the Reserve Bank of India (RBI) in this regard under the Foreign Exchange Management Act, 1999.

The decision to include the services sector in the ECB route comes close on the heels of easing of the policy norms earlier this week for infrastructure companies engaged in sectors such as roads and power.

Credit dearer

With the rate of inflation soaring to new highs each week and the RBI making efforts to tame the price spiral by sucking out liquidity from the system, bank credit is likely to get dearer. In such a scenario, there are apprehensions that the growth of the manufacturing sector, which is already witnessing a slowdown, as also the hitherto robust services sector may experience a squeeze in cheap capital availability and, in turn, lead to a slump in industrial and overall economic growth.

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