India has taken another step in liberalising its highly regulated economy, by lifting a number of restrictions on the free flow of investments.

The main measure, contained in a package of reforms unveiled by Finance Minister Jaswant Singh, is that Indian investment funds can now own up to $1bn in foreign shares.

Previously, Indian investors were forced to keep all but a tiny amount of their money at home, a measure that has caused intense resentment in the country's business community.

Along with a number of other technical reforms, the measure should help make the rupee a fully convertible currency.

Free and easy

The move goes some way to dismantling the protectionist walls that surround the Indian economy.

Traditionally, India has been reluctant to adopt the sort of free-market reforms insisted on by international lenders such as the International Monetary Fund, instead forging a highly regulated and idiosyncratic form of capitalism.

This has led to complaints from international investors, on whom India is increasingly relying as it strives to build a competitive hi-tech industry.

Economists have become concerned that the Indian economy, although relatively robust, is not growing as quickly as it needs to in order to eradicate poverty.

And heavy regulation of capital flows have irked the huge and often wealthy overseas Indian community, another potential source of finance.

Faster pace

The current Indian Government seems to be more determined to reform than its predecessors.

Mr Singh has also presided over shake-ups of direct and indirect taxation, and the on-off privatisation programme has started to get into gear.

In addition to the new rules for investment funds, Mr Singh unveiled some reforms to corporate regulations.

Now, listed Indian companies will be allowed to take larger shareholdings in foreign firms - although still within relatively strict limits.

And companies and individuals will have greater access to loans and foreign-currency bank accounts, previously a highly restricted privilege.