As part of the exercise to modify the ECB guidelines in view of the changes in the external sector, the ministry raised the limit for the $ 3 million scheme to $ 5 million, relaxed the average maturity profiles of short-term and long-term borrowings and enhanced the ECB eligibility under the exporters/foreign exchange earners scheme.

With regard to project related rupee expenditure, the government has decided to permit ECBs in all the sectors. However, the permission for such ECBs would be subject to certain conditions. The ECB raised for project-related rupee expenditure must be brought into the country immediately. Secondly, the ECB raised for import of capital goods and services should be utilised at the earliest and corporate should strictly comply with RBI's guidelines on parking ECBs outside till actual imports. Also the RBI would be monitoring ECB proceeds parked outside.

Thirdly, the conditions stipulate that the ECB raised would not be permitted for investment in stock market or in real estate.

The other conditions regarding the ECB eligibility for project finance, exposure limit etc. would remain unchanged.

The limit under the $ 3 million scheme has been raised to $ 5 million and the Reserve Bank of India (RBI), as before, shall continue to be the approving authority.

As part of the modified guidelines, the average maturity requirement for ECBs under the long-term maturity window which are outside the ECB cap has been reduced to eight years from 10 years for ECBs upto $ 100 million and to 16 years from 20 years for ECBs upto $ 200 million for general corporate objectives.

The government has also relaxed the minimum maturity norms for $ 5 million scheme to three years simple maturity; for ECBs upto $ 20 million to three years average maturity; ECB for 100 per cent EOUs to three years average maturity for any amount; and for ECBs above $ 20 million to five years average maturity for all other sectors.

Under the exporters/foreign exchange earners scheme, the ECB eligibility has been raised to three times, from the current two times, of the average export performance during the last three years subject to a maximum of $ 100 million.

The modified guidelines have also specified that in order to enable corporates to hedge exchange rate risks, the domestic rupee denominated structured obligations would be permitted to be credit enhanced by international banks/international financial institutions/ joint venture partners.

The ECB guidelines which have been modified in the background of changed external conditions, the requirement of the corporate and access to the international capital, will become operative with immediate effect.