India has removed trade restrictions on over 700 products in line with World Trade Organisation (WTO) recommendations.

Several goods, including agriculture products and processed foods, can now be freely imported.

The move formed part of a new trade policy announced by the commerce minister to further liberalise the Indian economy.

As part of its commitment to the WTO, India had agreed to remove all restrictions on imports by 2002.

Commerce Minister Murasoli Maran said he expected exports to grow by 20% as a result of the new trade measures.

"A number of policy changes will have to be initiated if we want to integrate with the global economy," Mr Maran said.

"We have to unshackle trade from irksome procedures and do away with needless restrictions on imports and exports," he added.

Economic zones

India announces new export and import policies every five years, but also fine tunes existing ones each year.

Mr Maran made several changes to the current policy which runs from 1997-2002:

• Import restrictions removed on 714 items
• Special economic zones to be set up in Gujarat and Tamil Nadu
• 4 existing export processing zones to be converted to special economic zones
• Diamond traders allowed more foreign exchange
• Import of silk under a special license
• Second-hand capital goods less than 10 years old can be imported directly

Mr Maran said the liberal import policies would not hurt domestic industry, which had been insulated from competition under India's protectionist economy.

One analyst said it could help domestic industry improve.

"With the peak duty of 35% and removal of restrictions, most consumer goods can be imported," Kamal Sen of Anand Rathi Securities said.

"This will put pressure on domestic industry," he added.

The special economic zones - which are being established in India's most industrialised states - would allow companies in the zones to import capital goods and raw materials free of duty.

In January, India lifted more than 1,400 trade restrictions against US goods.