RBI/2004/72
A.P.(DIR Series) Circular No. 75
February 23, 2004
To
All Authorised Dealers in Foreign Exchange
Madam / Sirs,
External Commercial Borrowings (ECB) for Overseas Direct Investment/Mergers
and Acquisitions
Authorised Dealers’ attention is invited to the revised External
Commercial Borrowings (ECB) guidelines issued vide A.P. (DIR Series) Circular
No.60 dated January 31, 2004.
2. With a view to enable Indian corporates to become global
players by facilitating their overseas direct investment, permitted end-use
for ECB is enlarged to include overseas direct investment in Joint Ventures
(JV)/Wholly Owned Subsidiaries (WOS). This would facilitate corporates to undertake
fresh investment or expansion of existing JV/WOS including mergers and acquisitions
abroad by harnessing resources at globally competitive rates.
3. ECB for overseas direct investment shall be in conformity
with other parameters of the ECB guidelines issued vide A.P.
(DIR Series) Circular No.60 dated January 31, 2004 and the existing guidelines
on Indian
Direct Investment vide Master Circular No.2/2003-2004 dated July 1, 2003
on Indian Direct Investment in JVs/WOSs abroad read with A.
P. (DIR Series) Circulars No. 41 &A.P.
(DIR Series) Circular No. 42 dated December 06, 2003 and A.P.(DIR
Series) Circular No.57 dated January 13, 2004.
4. It may be noted that the ECB proceeds should be parked
overseas until its utilisation for investment abroad.
5. The above amendments to ECB Policy will come into force
with immediate effect.
6. Authorised Dealers may bring the contents of this Circular
to the notice of their constituents concerned.
7. The directions contained in this circular have been issued
under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act,
1999 (42 of 1999).