1. INTRODUCTION
Under the previous regulatory framework for external commercial
borrowing ("ECB"), the borrowers were
restricted from using the ECB for: (a) real estate activities; (b)
investment in capital market; (c) equity investments; (d) repayment
of Rupee loans (unless received from a foreign equity holder); (e)
working capital purposes and general corporate purposes (unless
received from a foreign equity holder); and (f) on-lending for such
activities.
Earlier this year, through an amendment to the ECB
guidelines1, all entities permitted to avail foreign
direct investment ("FDI") under 100%
automatic route were also permitted to avail ECB and the start-ups
were exempted from the end-use restrictions mentioned above, thus
improving the ease of doing business and boosting the ECBs in
India.
