India CEOs want easy ECB rules to boost investment

NEW DELHI: Indian firms want a relaxation in overseas borrowing rules as they plan to spend 25 percent of their investment in infrastructure projects in the next five years, a survey on chief executives said.   

The snap poll on CEOs by the Confederation of Indian Industry (CII) also said private firms see investment opportunities in projects worth only $50 billion, compared with the $475 billion projected by a government-appointed panel.   

In September, the finance minister said for the economy to grow by 9 percent a year, India has to raise investments in infrastructure to 8 percent of gross domestic product in the next five years from 4.6 percent now.   

Power sector emerged as the most attractive sector to invest, followed by telecommunication, ports, airports and roads, CII said, adding that companies expected rapid development of special economic zones.   

About 65 percent of the CEOs preferred domestic equity and foreign direct investment as the major sources of investment, while 28 percent preferred external commercial borrowing (ECB), the survey released on Sunday said.   

"However, it was felt that the recent ceiling on the amount of ECBs to be raised could slowdown investment in infrastructure sector through the ECB route," CII said.   

In August, the central bank tightened ECB rules by limiting the use of foreign loans in India at $20 million per company.   

Most of the CEOs said infrastructure funding would not be through corporate bonds as the local market for them were not deep and developed.   

The CEOs listed complex rules and delays in approvals as the most important impediment for a greater private participation in infrastructure.

Land acquisition, non-availability of long-term finance and high cost of finance also added to the woes.