India’s With the Japanese government seeking relaxation of rules on external commercial borrowings (ECBs) for the mega Delhi-Mumbai Industrial Corridor (DMIC) project, Delhi Mumbai Industrial Corridor Development Corporation Limited has resolved all issues relating to financing of the project through this route.
“We have sorted out all the issues of ECBs for the DMIC project,” Amitabh Kant, CEO and MD, Delhi Mumbai Industrial Corridor Development Corporation Limited told Express. However, he declined to provide any details on the specific issues raised by the Japanese government on the project.
According to sources, Japan had asked India to allow Japanese government-owned agencies to bear the exchange-rate risk to provide rupee loans to Indian entities. Currently, yen loans by Japanese agencies are converted into rupees by an intermediary Indian bank, which charges a premium as the loan has to be repaid in yen and the bank bears the exchange-rate fluctuation risk. The government had also formed a committee under former Economic Affairs Secretary R. Gopalan to look into the matter as the proposal required clearance from both the Finance Ministry and the RBI.
On its part, the government too has been trying to make it easier for companies to raise funds through ECBs. In fact in June, the Centre and RBI announced a series of measures in tandem, allowing manufacturing and infrastructure companies to borrow more from overseas to repay their high cost rupee loans.
“It has been decided to allow Indian companies in manufacturing and infrastructure sector and having foreign exchange earnings to avail of ECB for repayment of outstanding rupee loans towards capital expenditure and/or fresh rupee capital expenditure under the approval route,” RBI had said.
“We have sorted out all the issues of ECBs for the DMIC project,” Amitabh Kant, CEO and MD, Delhi Mumbai Industrial Corridor Development Corporation Limited told Express. However, he declined to provide any details on the specific issues raised by the Japanese government on the project.
According to sources, Japan had asked India to allow Japanese government-owned agencies to bear the exchange-rate risk to provide rupee loans to Indian entities. Currently, yen loans by Japanese agencies are converted into rupees by an intermediary Indian bank, which charges a premium as the loan has to be repaid in yen and the bank bears the exchange-rate fluctuation risk. The government had also formed a committee under former Economic Affairs Secretary R. Gopalan to look into the matter as the proposal required clearance from both the Finance Ministry and the RBI.
On its part, the government too has been trying to make it easier for companies to raise funds through ECBs. In fact in June, the Centre and RBI announced a series of measures in tandem, allowing manufacturing and infrastructure companies to borrow more from overseas to repay their high cost rupee loans.
“It has been decided to allow Indian companies in manufacturing and infrastructure sector and having foreign exchange earnings to avail of ECB for repayment of outstanding rupee loans towards capital expenditure and/or fresh rupee capital expenditure under the approval route,” RBI had said.
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