New Delhi: India will allow power companies to raise funds through external commercial borrowings (ECBs) to refinance up to 40% of their rupee debt on current projects, with a condition that the remaining 60% must be utilized for investments in new projects, Ministry of Finance said in a statement.
"This policy decision would increase access to cheaper funds for companies in the power sector," it said earlier Wednesday.
The power companies were so far allowed to use only 25% of the ECB to refinance their rupee-debt.
The government will also open the ECB route for capital expenditure for the maintenance and operations of toll systems in the roadways and highways sector, the ministry said in a separate statement Wednesday.
"The policy decision will provide an additional source of low cost capital and encourage greater investments in road construction projects," the statement added.
The Reserve Bank of India is likely to issue relevant notifications within seven days giving effect to these Budget announcements, the ministry said.
Finance Minister Pranab Mukherjee in the Budget 2012-13 had said that ECB will be permitted or increased in power projects, highway toll projects, airline industry, and low-cost housing.
The government envisages a need for investments worth $1 trillion in the 12th Five Year Plan period, beginning April 1, 2012, to revamp the country's sagging infrastructure.