New Delhi: India Inc has stepped up raising resources from overseas and has mopped up USD 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 USD 1.99 billion and USD 1.07 billion, the month of August and September saw significant rise in such fund mop up. In August India Inc raised USD 2.37 billion and in September it stood at USD 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.
Moreover analysis of the official data on ECBs indicates that mostly the ECBs were used for modernisation, followed by new projects and the import of capital goods, Assocham said.
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 percent of the of the average foreign exchange earnings in the immediate past three years or 50 percent of the of the highest forex earnings in any of those three years, whichever is higher.
If the Indian firms manage the ECBs well through a proper hedging and professional risk management methods, India Inc can make a good use of this source, Assocham said adding that these inflows would be good even for the rupee value.