The government on Wednesday allowed developers of special economic zones to raise overseas debt for building infrastructure facilities within the zones. The move is expected to benefit companies such as Reliance Industries , Adani, Mahindra, Suzlon, Parsvanath and others who have plans for SEZs in place. However, SEZ developers cannot raise ECB for buidling integrated townships or commercial real estate within the zone. They can raise overseas loan after taking approval for establishing infrastructure facilities including power, telecommunication, railways, road including bridges, ports, industrial parks, urban infrastructure (water supply, sanitation and sewage projects) and mining, refining and exploration as laid down in the ECB policy.

Companies such as DLF, Unitech and Parsvnath that build integrated townships have also been allowed to raise foreign loans upto December. Integrated townships comprise houses and other urban amenities like commercial premises, hotels, resorts, roads and bridges built in an area of at least 100 acres. The government had opened the foreign borrowing window for developers of integrated townships on January 2 this year until June 30 as it sought to stimulate the economy. The facility has been extended untill December to make a meaningful impact on the sector which has been hit hard by fall in demand.

“The ECB policy is regularly reviewed by the Government in consultation with the Reserve Bank keeping in tune with the evolving macroeconomic conditions, sectoral requirements, global developments, etc. On a review of the macroeconomic conditions, certain liberalization or modifications in the ECB Policy have been proposed,” a finance ministry statement said here. Getting tough on companies that have violated ECB norms, the government has said they will not be allowed to access automatic route for their overseas loans. “Currently, the ECB policy is not explicit about accessing of ECB by the corporates, which have violated the extant ECB policy and are under investigation by the Reserve Bank and or Directorate of Enforcement. It is clarified that Any request by such corporates for ECB will be examined under the approval route,” the statement said.

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