With a view to enable Indian corporates to become global players by facilitating their overseas direct investment, permitted end-use for ECB is enlarged to include overseas direct investment in Joint Ventures (JV)/Wholly Owned Subsidiaries (WOS). This would facilitate corporates to undertake fresh investment or expansion of existing JV/WOS including mergers and acquisitions abroad by harnessing resources at globally competitive rates. ECB for overseas direct investment shall be in conformity with other parameters of the ECB guidelines.

As per RBI notification dated 23rd February, 2004, this amendment take effect immediately. Proceeds of external commercial borrowings should be parked overseas till they were invested in acquiring a foreign company.

Number of business groups, including the Tatas and Reliance, are planning to raise funds abroad, through debt and foreign currency convertible bonds. Tata Motors is planning an external commercial borrowing for its proposed takeover of Daewoo Motors. Over $2 billion of external commercial borrowings are expected after latest amendment to ECB guidelines.

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