ANNOUNCEMENT 18 Sep 2013In September 2013, the government of India announced changed rules for foreign investors.
NUMBER OF INTERVENTIONS
Reserve Bank of India notification -
On 18 September 2013, the Reserve Bank of India issued Circular No. 48 (RBI/2013-14/270), expanding the existing definition of the "infrastructure" sector eligible for External Commercial Borrowings (ECB).
The older definition included the following sectors:
(i) power, (ii) telecommunication, (iii) railways, (iv) road including bridges, (v) sea port and airport (vi) industrial parks (vii) urban infrastructure (water supply, sanitation and sewage projects), (viii) mining, exploration and refining, (ix) cold storage or cold room facility, including farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat.
The new definition will additionally include the following sectors:
(a) Energy (b) Communication (c) Transport (d) Water and sanitation (e) Mining, exploration and refining (f) Social and commercial infrastructure
Through ECBs, Indian companies and Public Sector Undertakings can access funds from abroad. According to the Reserve Bank of India, ECBs refer to commercial loans in the form of bank loans, securitised instruments, buyers' credit and suppliers' credit availed of from non-resident lenders with a minimum average maturity of 3 years. Thus, the measure allows foreign undertakings to invest in these additional sectors in India.