Full rupee convertibility crucial for India’s global play: Jayant Sinha

India will have to move towards full capital account convertibility of the rupee in order to better integrate with the global economy and be able to play an active and meaningful role in the global economy, Jayant Sinha, minister of state for finance, has said.

With full capital convertibility, the local currency can be converted into foreign currency and back, and this would help deepen and broaden the country's capital market, he said.

Sinha was speaking to reporters on the sidelines of a conference organised by the Pension Fund Regulatory and development Authority (PFRDA) in the capital on Wednesday.

Capital account convertibility will ease market transactions, enabling a foreign investor repatriate money in his own currency and vice versa, the minister said.

Currently, India allows full convertibility only in the current account and not in the capital account.

''There are many policy measures and many things we have to do over a period of time if indeed India has to become one of the top three economies in the world,'' Sinha added.

It may be noted that Sinha's remarks come close on the heels of RBI Governor Raghuram Rajan's statement last week that the central bank was looking to allow full capital account convertibility in a phased manner.

The setting up of the International Financial Services Centre (IFSC) is an important step towards capital market expansion and this would complement a move towards capital account convertibility.

IFSCs need an enabling ecosystem besides regulatory support to succeed and this calls for a move towards capital account convertibility.