The Indian government hopes to open the economy more to foreign competition despite opposition from powerful leftist allies, a senior government official said yesterday.
The government plans to ease foreign investment rules and open new sectors to overseas capital, despite political opposition which forced the Cabinet earlier this month to delay a decision.
A panel of ministers has since been set up to hammer out a consensus on the proposals, which include simplifying procedures, raising caps on foreign equity participation in some sectors and opening electricity trading and mining activities to foreign investment.
"We do think, very shortly, we will make major announcements," Ajay Dua, secretary in the industrial policy department, yesterday told the India Economic Summit.
The summit is a gathering of global business leaders who are exploring business opportunities in India, one of the world's most rapidly expanding economies.
Dua's comments came a day after the Indian finance minister said the country must open up its economy more to accelerate its already rapid economic growth.
"We must exploit the single biggest advantage India has -- an educated and young workforce that is growing," Finance Minister P. Chidambaram told the summit that opened Sunday.
"We must open the doors to foreign direct investment," he said.
India's economy is currently growing at a 7 percent rate, but experts and officials said it could emulate China's success and expand even faster.
"The Indian economy should look to 8 percent and beyond," Chidambaram said.
But to do so, India needs to make huge investments in infrastructure such as roads, ports and electricity generation, and he said a more liberal policy on foreign capital was the key.
Although India has increasingly allowed foreign direct investment since switching from a socialist-style economy in the early 1990s, many foreign companies still feel further reforms are necessary.
There are limits to foreign equity participation in many sectors, and problems with red tape persist.
India has received US$4.5 billion in foreign direct investment this year, a fraction of what China has drawn during the same period, Chidambaram said.
Delegates to the three-day summit, organized by the Geneva-based World Economic Forum, said they were optimistic India would change.
"I have been coming here. But I have never heard such optimism, and such positive noise about growth and development in India," said Martin Sorrell, group chief executive of the British-based advertising giant WPP.
Still, a large number of Indians remain poor, left out of the economic boom of the past decade and a half. About 400 million people, nearly 40 percent of India's 1 billion plus population, live on less than US$1 a day.
The summit was also discussing what should be done to make economic growth more inclusive to prevent a social and political backlash resulting from widening economic disparities.