Foreign credit will benefit Indian infrastructure projects

In a move designed to provide continued support and deepen access to credit for the infrastructure sector, the Reserve Bank of India (RBI) has through a series of circulars issued on 2 March, introduced certain relaxations in the existing external commercial borrowing (ECB) policy. It follows a series of circulars that were introduced to increase the net inflow of funds to the infrastructure sector and echoes the vision put forward in the union budget.

Accordingly, the RBI has expanded the definition of “infrastructure sector”, while also carving out exceptions for a specific category of non banking financial companies (NBFCs) operating in the sector. The RBI has also permitted non-residents to credit enhance rupee-denominated structured obligations in relation to the sector.

New categories

The RBI has sought to extend the benefit of ECB policy relaxations to the agricultural sector by broadening the definition of “infrastructure sector” to include “cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat”.

Ameya Khandge is a counsel at Trilegal in Mumbai where Vardaan Ahluwalia is an associate. Trilegal is a full-service law firm that advises on corporate and commercial law in India and provides commercially oriented legal advice in relation to all sectors of the economy. The firm has offices in Delhi, Mumbai, Bangalore and Hyderabad and has over 120 lawyers, some with experience at law firms in the US, the UK and Japan.