The government has further liberalised overseas borrowing limit for companies in the the infrastructure sector, as it fears the global financial market turbulence would take some time to settle.

The government has raised the annual overseas borrowing limit for infrastructure projects through issue of Euro Convertible Bonds and modified the cost ceilings in respect of bonds with minimum average maturity of over seven years.

Accordingly, borrowers in the infrastructure sector will now be allowed to borrow up to $500 a year against the existing limit of $100 million in the infrastructure sector under the approval route.

The revised all-in cost ceilings for ECBs will now be 450 basis points against the existing 350 basis points for an average maturity period of over seven years.

''Considering the huge funding requirements, particularly for meeting rupee expenditure, it has been decided to enhance the existing limit of $100 million to $500 million per year for the borrowers in the infrastructure sector under the approval route,'' a finance ministry release said, adding, ''Borrowings in excess of $100 million should have a minimum average maturity of 7 years.

At present, borrowers are allowed to avail ECBs up to $500 million under the `automatic route' for import of capital goods and overseas acquisition. In May the government allowed companies other than those in the infrastructure sector to borrow $50 million for rupee capital expenditure under the `approval route'.

''In view of widening credit spreads in the international financial markets, it has been decided to modify the all-in-cost ceilings in respect of ECBs with minimum average maturity of over seven years. The revised all-in cost ceilings for ECBs will now be:

The ECB policy is regularly reviewed by the government in consultation with the Reserve Bank of India (RBI) to keep it in tune with the evolving macroeconomic situation, changing market conditions, sectoral requirements, etc.

All other aspects of ECB policy such as eligible borrower, recognised lender, end-use of foreign currency expenditure for import of capital goods and overseas investments, average maturity period, prepayment, refinancing of existing ECB and reporting arrangements remain unchanged.

The amendments in ECB policy will come into force on the date of notification of regulations/directions issued by the RBI under the Foreign Exchange Management Act, 1999.