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The Ministry of Finance, India has announced amendment to the existing external commercial borrowings (ECB) policy of the nation in order to facilitate payments for the approaching auction of spectrum for the third generation services (3G).

In announcement made by the Finance Ministry, it notified that the government has allowed the prospective bidders to raise ECBs within 12 months. Moreover, the bidders have the option raise short-term funds from the domestic market that could be later refinanced through external commercial borrowings (ECBs).

Mentioning the reason behind this amendment made to the ECB policy, Finance Minstry has said “given the short window available between the date of application for the auction and the date of payment, the bidders find it difficult to raise ECB to meet the payment obligation for bidding.”

As per the guidelines issued by the Department of Telecommunications (DoT) the successful bidders would be required to pay 25% of the bid amount within 5 days of the close of the auction and the balance amount within 15 days of the auction closure. This time period is assumed to be too short to raise funds and make the required payments.

Further, the ministry mentioned that “it has now been decided that the fee for spectrum allocation may be met out of Rupee resources by successful bidders, to be refinanced with a long –term ECB, under the approval route.”

The auction of the 3G radiowaves is one of the most awaited events in the telecom domain for the sub-continent. The government expects to rake in up to Rs 35,000 crore through the auction of 3G spectrum, which is likely to be completed by March. It has fixed the reserve price at Rs 3,500 crore.