India aims to throw open its doors wider to overseas investors in coming weeks, a minister said Wednesday, as it seeks to spur a weak economy before the general election.
The government has already relaxed foreign direct investment (FDI) rules in such sectors as civil aviation, retail, telecommunications, defense and state-owned oil refineries as it tries to loosen the shackles on the still mainly inward-looking economy.
"The government will continue its endeavor for liberalizing the FDI policy further in the coming weeks to ensure India retains its leadership position for attracting foreign investments," Commerce Minister Anand Sharma said.
India is struggling to increase its attractiveness to overseas business and to support growth with the election due by May.
Five percent annual growth -- the slowest in a decade -- a string of graft scandals and project approval delays have soured the investor mood on Asia's third-largest economy.
But in a welcome vote of confidence in the country's long-term potential, interest in India has shown signs of picking up lately.
Earlier this week the foreign investment regulator cleared plans by British retail Tesco and Vodafone, the world's largest mobile phone operator, to invest more than $1.5 billion in India.
"The bold decisions of the government (to liberalize the economy) have resonated with the global community and we have seen results in the last few months," Sharma said in a New Year's Day message.
But data showed that overall between April and October of this financial year, India's FDI fell 15 percent to $12.6 billion from the same period a year earlier.
Officials say the government is working to relax a ban on FDI in the cash-hungry colonial-built railways and improve dilapidated lines to ports and industrial hubs.
But the outlook on India's economic prospects for the financial year to March 2014 still remains downbeat, economists said.
Ratings agency ICRA in a report called the government's fiscal situation "gloomy" after New Delhi said it had used up 94 percent of its borrowing limit by November.
ICRA said more spending cuts that could slow the economy further will be needed for the government to meet its fiscal deficit target -- the gap between spending and revenue -- of 4.8 percent of gross domestic product for the financial year to March.
Finance Minister P. Chidambaram has repeatedly said the fiscal deficit target is a "red line" that will not be breached.