1. Introduction
India's external commercial borrowing (ECB) regime is poised
for a major overhaul. The Reserve Bank of India has issued the
Draft Foreign Exchange Management (Borrowing and Lending) (Fourth
Amendment) Regulations, 2025 under FEMA, seeking comments on a
framework that would substantially recast foreign currency
borrowing by Indian entities. Released alongside the
government's review of ECB policy and external debt, the draft
signals a move towards a more liberal, market‑linked and
risk‑based approach.
ECBs are foreign currency loans raised by eligible Indian
residents from recognised non‑resident lenders are currently
governed by the FEMA (Borrowing and Lending) Regulations, 2018 and
RBI's ECB Master Directions. ECBs have been an important source
of funding for infrastructure, capital expenditure, and
refinancing, but they sit within a tightly regulated corridor of
eligible borrowers, lenders, maturities, costs, and end‑uses.
reflecting a decade of
