The government has decided to relax rules for borrowing for telecom operators who win the bid for 3G wireless spectrum.

The decision will enable operators raise funds from the domestic market for the payment immediately, and the option to refinance the fee through overseas borrowings later.

The auction for third generation (3G) airwaves is expected to be completed by March this year. According to a government estimate, the spectrum allocation could raise up to Rs 350 billion. A minimum bid price for all-India 3G spectrum has been fixed at Rs 3,500 crore.

Companies who win the bid have to pay 25% of the bid amount within five days after the auction and the rest within 15 days.

A finance ministry official said "The fee for spectrum allocation may be met out of rupee resources by successful bidders, to be refinanced with long-term external commercial borrowings, under the approval route."

The government conditions include that the borrowing must be raised with 12 months from the date of payment of final installment. Analysts believe that it will help companies utilize the excess liquidity in the domestic market and also help the government to cover its fiscal deficit to an extent.

Domestic firms with telecom licenses and foreign firms with experience in the 3G spectrum on its own or through a jointly managed entity are eligible for bidding in the auction.

The Reserve Bank of India has already allowed the firms to raise overseas funds to pay the fee for spectrum.