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TMI BlogIndia's Investment and External Commercial Borrowings (ECB) LandscapeX X X X Extracts X X X X X X X X Extracts X X X X ..... India's Investment and External Commercial Borrowings (ECB) Landscape X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, and role of ECBs in corporate financing. Investment Announcements (9MFY25) Investment activity in India continues to grow at a rapid pace, with significant contributions from the private sector. * In 9MFY25 i.e., the nine months of FY25 (April-December 2024), total investment announcements stood at ₹32.01 lakh crore. * This marks a 39% increase from ₹23 lakh crore in 9MFY24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , reflecting a positive investment outlook. * The private sector accounted for nearly 56% (FY24) and nearly 70% (9MFY25) of these announcements, signaling strong corporate confidence. Gross Block of Indian Corporates * As of March 2024, the gross block of Indian corporates reached ₹106.50 lakh crore, compared to ₹73.94 lakh crore in March 2020. * Over the last five years, an ave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rage of more than ₹8 lakh crore has been added annually to the corporate gross block. * Additionally, capital work in progress stood at ₹13.63 lakh crore in March 2024, indicating strong ongoing project development. Household Net Financial Savings Household Net Financial Savings (HNFS) in India improved to 5.3% of GDP in FY24 from 5.0% in FY23. Additionally, savings in physical ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets increased from 12.9% of GDP in FY23 to 13.5% in FY24. Investment as a Percentage of GDP Investment as a share of GDP has improved in recent years, led by both government and private sector contributions. * In FY23, government investment reached 4.1% of GDP, the highest since FY12. * Private corporate investment rose to 11.9% of GDP in FY23, its highest level since FY16. * The share of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... private investment is projected to further increase to around 12.5% in FY24, reflecting improved business sentiment. External Commercial Borrowings (ECBs) (as of September 2024) ECBs have emerged as a key source of funding for Indian corporates, enabling capital expansion and modernization. * The total outstanding ECBs stood at $190.4 billion as of September 2024. * Of this, the non-Rupee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d non-FDI components accounted for approximately $154.9 billion. * The private sector held 63% ($97.58 billion), while the public sector accounted for 37% ($55.5 billion). * Hedging remains a critical aspect, with private companies hedging approximately 74% of the total hedged corpus. ECBs in FY25 (Up to November 2024) The ECB pipeline remains strong, reflecting sustained demand for overseas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... funding. * By November 2024, total ECB registrations stood at $33.8 billion. * Nearly half of the registration, in FY24, are for the import of capital goods, modernization, local capital expenditure, and new projects. * ECB registration as a percentage of GDP, declined from 1.9% in FY20 to 1.2% in FY24, suggesting improved domestic financing options. ECB Cost Trends (April-November 2024) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest rates on ECBs have shown a declining trend, reducing borrowing costs for Indian companies. * The overall cost of ECBs fell by 12 basis points year-over-year to 6.6% during April-November 2024. * In November 2024, the overall cost of ECBs further declined to 5.8%, a reduction of 71 basis points from the previous month. Clarification on ECB Data Recent reports have misrepresented Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a's ECB liabilities, leading to confusion. * Some media sources incorrectly reported that India's ECB stock reached $273 billion by early 2025. * However, the actual outstanding ECB, as per RBI data (September 2024), is $190.4 billion. * The discrepancy arises from the inclusion of $72.057 billion in Foreign Portfolio Investments (FPIs) - Debt investments in long-term corporate and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment securities, which should not be classified as corporate ECB liabilities.
References
https://sbi.co.in/documents/13958/43951007/ECB+and+investment_SBI+Report.pdf/6e3f0c0c-b4e2-8482-3123-5b93da8585ae?t=1737530427571 X X X X Extracts X X X X X X X X Extracts X X X X
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