India Inc Upset Over ECB Norms

The rising tide of greenbacks could be a problem of plenty and the curbs on overseas corporate borrowing has taken India Inc by surprise. Around 88 per cent of corporate India believes that tightening of ECB norms has dampened spirits. Most of businesses are going through expansion phase and putting a cap on borrowings will hurt capital expenditure plans says 73 per cent of India Inc. However, the good news for exporters is that the rupee might weaken. Around 77 per cent of institutions believe that rupee will touch 41.50 against dollar.

But a minority 23 per cent is even more optimistic. They believe rupee to touch 42.50 by 2007 end. This has come a big sentiment booster for exporters. Around 71 per cent of corporate house expects rupee decline will boost earnings. Banks who were reeling under margin pressure, its time for them to cheer up. Around 66 per cent of the bankers believe that with tightening of overseas borrowing norms, domestic lending for banks are likely to rise. However, 86 per cent of corporate India expects the cost of funds to move up. The street is evenly divided on government''s new ECB norms. Citigroup says that software and banking companies are to benefit, where as CLSA feels its negative for auto, capital goods and mid-cap companies.