Lok Sabha Question No. 3759 (UNSTARRED), answered on 2025-03-24
Subject: External Commercial Borrowings
Ministry: FINANCE
Asked by: Shri Lavu Sri Krishna Devarayalu, Shri G M Harish Balayogi

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 3759

ANSWERED ON MONDAY, MARCH 24, 2025/CHAITRA 3, 1947 (SAKA)

## EXTERNAL COMMERCIAL BORROWINGS

## 3759.    Shri Lavu Sri Krishna Devarayalu: Shri G M Harish Balayogi:

Will the Minister of FINANCE be pleased to state: (a) the details of the Indian companies with external commercial borrowings including the total outstanding amount, sector-wise distribution and the extent of hedging against currency risks; (b)  the  measures  taken/being  taken  by  the  Government  to  mitigate  the  increased  financial burden on Indian companies due to the recent depreciation of the rupee, especially those with unhedged external commercial borrowings; (c)  the  steps  taken  by  the  Government  to  monitor  and  regulate  the  rising  trend  of  external commercial borrowings to prevent potential financial instability due to currency depreciation; (d) whether the Government is considering to promote alternative financing options to reduce corporate reliance on foreign currency loans and mitigate exchange rate risks; and (e) if so, the details of the specific measures being explored, including the potential introduction of  innovative  financial  instruments  such  as  rupee-denominated  bonds  (masala  bonds)  or Infrastructure Investment Trusts (InvITs) to provide businesses with viable domestic funding alternatives?

## ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a):  As  of  September 2024, the total outstanding External Commercial Borrowings (ECBs) stood  at  USD  190,397  million,  with  around  two-thirds  of  such  ECBs  being  hedged.  The company-wise details of outstanding ECBs with extent of hedging against currency risks, are not compiled and maintained by the Reserve Bank of India (RBI).

(b) and (c): ECBs are governed under the framework formulated by RBI under the powers given under Foreign Exchange Management Act (FEMA), 1999. This framework has been progressively  calibrated  to  address  the  evolving  financing  needs  of  Indian  entities  and  the macroeconomic  developments.  As  per  extant  instructions,  entities  raising  ECBs  in  foreign currency are required to follow the guidelines for hedging issued, if any, by the concerned sectoral  or  prudential regulator  in  respect  of  foreign  currency  exposure.  In  addition, Infrastructure space companies shall have a risk management policy approved by their Board and are required to mandatorily hedge 70 percent of their ECB exposure in case the average maturity of the ECB is less than 5 years.

(d)  and  (e):  The  Government  of  India,  in  collaboration  with  RBI  and  the  Securities  and Exchange Board of India (SEBI), continues to undertake measures aimed at diversifying and expanding alternative sources of raising capital for Indian companies. In recent years, several initiatives have been introduced to attract foreign capital, that include, inter-alia, notification of the 'Direct Listing of Equity Shares of Companies Incorporated in India on International Exchanges Scheme', liberalization of the Foreign Direct Investment (FDI) policy, simplification  of  processes  to  enhance  the  ease  of  onboarding  Foreign  Portfolio  Investors (FPIs),  and  a  comprehensive  review  of  the  regulatory  regime  governing  foreign  portfolio investment in debt instruments.

At  the  same  time,  several  policy  initiatives  have  been  introduced  to  enhance  sources  of domestic capital. These measures have significantly boosted fund mobilization in recent years through  instruments  like  Real  Estate  Investment  Trusts  (REITs),  Infrastructure  Investment Trusts (InvITs), and Alternative Investment Funds (AIFs). The total funds mobilized through REITs and InvITs have increased from ₹10,772 crore in FY 2019-20 to ₹22,702 crore in FY 2024-25 (up to February 2025). Likewise, cumulative funds raised through AIFs have grown significantly, from ₹1,71,713 crore as of December 2019 to ₹5,27,284 crore as of December 2024.

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