India's Prime Minister Manmohan Singh announced earlier this month that his government is looking to make its rupee more convertible. India is considering the policy change to stimulate foreign investment and to reach its self-stated goal of 10 percent annual GDP growth.

Citing two decades of economic reform in India and the nation's internationally integrated economy, the central bank followed up Singh's comments last week by promising a road map for creating a more convertible rupee by the end of July. A more convertible rupee will improve the ease by which rupees can be converted into foreign currency, and vice-versa.

Economic reforms in India have accelerated growth, enhanced stability and strengthened both external and financial sectors, said Alpana Killawala, the central bank's Chief General Manager.

He added that the process was contingent on preconditions, including forthcoming analysis of the new policy's effect on India.

A more convertible rupee would provide the nation's investors with better access foreign markets and expedite international deal-making. A change would also allow foreign investors to more easily invest in Indian business ventures.

The new policy would represent a shift from current currency control rules. Presently, the central bank must give permission before any capital can be moved out of the country, and before any funds can be borrowed from abroad.

The current push to make a more convertible rupee began in 1997, when a panel exploring full currency convertibility proposed currency reform by 2000. However, the Asian economic crisis in the late 90's put a damper on the panel's reform plans.

The six-member committee will begin studying regulatory policy in May, considering drawbacks and safeguards of convertibility, before unveiling its roadmap for the rupee.