In a move to help the ailing aviation sector of its immediate financing concerns, the Government has allowed aviation sector to raise one billion dollars to manage its working capital through External Commercial Borrowing, ECB route.

However, the limit for individual companies has been fixed at 300 million dollars. The ECB window to the civil aviation sector would be available for one year only.

An ECB is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs undertakings. ECBs include loans, buyers' credit, suppliers' credit, securitised instruments such as notes and fixed rate bonds.

According to a statement issued by the Finance Ministry, this policy decision will provide an additional source of capital at low cost to the airline industry and help them tide over their present financial crunch. 

The Reserve Bank of India is expected to issue relevant ciruclar or notiification giving effect to the aforesaid Budget announcement within a week. 

The official release said that the rapid growth of the aviation sector in India has generated demand for additional finance for working capital and capacity expansion. 

High operating costs, particularly on account of high fuel costs, have put additional stress on the airline industry.