India's record foreign exchange reserves provide the country with an opportunity to further ease rules on foreign investments and cut import tariffs faster, a government report said on Thursday.
India's foreign exchange reserves, running at record levels of more than $75 billion, have been boosted this year by strong inflows from expatriate Indians and exports, particularly by the software sector.
"The reserves further provide an opportunity to expedite completion of the trade liberalisation agenda," the Economic Survey for 2002-03 (April-March) said.
It noted that India's import tariffs were high in comparison to Asian and global standards and needed to be reduced faster.
Indian import tariffs average around 35 per cent compared with 15-to-25 per cent in neighbouring South Asian nations.
While India has said it will cut tariffs to an average level of 16 per cent over three years, faster implementation would help remove bias in other nations against Indian exports, spur imports and increase demand for foreign exchange, the Survey said.
The Survey also suggested easing foreign investment rules further to boost inflows in order to supply needed economic investment and help manage external debt.
Analysts expect the government to ease foreign investment rules in the Budget, with the banking, telecommunications and insurance sectors seen as the main beneficiaries.
The survey, which comes a day before the Budget for the next financial year 2003-04, is a report card on the economy's performance in the current fiscal year and is tracked for clues to the government's policy-making.
While export growth has been good this year, it must be sustained to ensure balance of payments stability, the survey said, citing concern about uneven merchandise export growth.
The strong remittances from expatriate Indians and software exports helped the current account post a $1.67 billion surplus in April-September 2002 and this was likely to be maintained for the rest of the fiscal year, the Economic Survey said.
Reuters