India must remove limits on overseas borrowings, suggests panel

India should remove the limits on corporates' external commercial borrowings, according to recommendations of a committee which submitted its report to the government on Friday, television channels reported.

The committee headed by M S Sahoo, a former member of the Securities and Exchange Board of India, was given the task to review the rules on external commercial borrowings.

The panel was also in favour of removing end-use restrictions, and recommended that every borrower should hedge a part of their borrowing, according to the television channels.

Currently the limit for each Indian company to raise funds through ECB is $750 million in a financial year barring in segments such as hotel, hospital and software sectors.

Companies also have to limit their borrowing cost at 350 basis points over six-month LIBOR for three to five year maturity and at 500 bps over LIBOR for more than five years, according to the Reserve Bank of India.