The Reserve Bank of India (RBI) has decided to allow developers of India’s national manufacturing investment zones (NMIZs) to use external commercial borrowings for infrastructure projects within the zones. In a circular dated 29 February, the RBI stated that developers of NMIZs could obtain ECBs under the approval route for infrastructure developments specified within the Master Circular on External Commercial Borrowings and Trade Credits, published on 1 July 2011.
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In line with the master circular, ECBs under the approval route can be used for power projects, telecommunications, railways, roads, bridges, sea ports and airports, industrial parks, water supply, sanitation, sewage projects, mining, refining and exploration, cold storage and cold room facilities.
NMIZs have been conceived by the Department of Industrial Policy and Promotion to enhance India’s manufacturing capabilities and boost investment in the sector. They have been designed to create jobs, provide modern infrastructure, support green technologies, and introduce investment incentives and business-friendly policies. Seven NMIZs in the Delhi-Mumbai industrial corridor are ready to be implemented. Each NMIZ is expected to cover 5,000 hectares and will contain production units, public utilities, logistics, environmental protection mechanisms, residential areas and administered services.
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The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.
