CAPITAL GOODS IMPORT - ECB LIBERALISED

The Reserve bank of India (RBI) has decided to allow companies in the infrastructure sector,
where "infrastructure" is as defined under the extant guidelines on External Commercial
Borrowings (ECB) to avail of trade credit up to a maximum period of five years for import of
capital goods as classified by DGFT subject to the following conditions: -

• The trade credit must be abinitio contracted for a period not less than fifteen months and should not be in the nature of short-term roll overs; and
• AD banks are not permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution for the extended period beyond three years.