At the Singapore Ministerial Conference, a ministerial statement on trade in information technology products was adopted. This declaration aims to develop global trade in information technology products. India participated from the outset in the negotiations of the agreement, after reviewing the effects of the proposed agreement and beginning in-depth discussions with trading partners on 1 April 1997. India has committed to remove, as planned, import duties on products covered by the ITA. Quantitative restrictions on these products for BOP reasons would also expire on March 31, 2000. The deregulation of the banking system continues. Interest rates on term deposits of more than one year and deposits of non-resident external rupees over two years have been deregulated. Selective credit controls on a number of raw materials were abolished from October 1996. Competition in the banking sector has gradually intensified, with ten new private sector banks starting work on the 13 “policy authorizations” issued to date. The RBI has published guidelines for the creation of new local private banks. Two such banks have already been authorized “in principle.” Banks were allowed to set their own ceilings for aggregate exchange rate spreads from April 1996. Starting in October 1996, banks were allowed to provide foreign currency-denominated loans based on their FCNR accounts to meet foreign exchange or rupee requirements. The 10% incremental cash reserve ratio for banks has been abolished and the legal liquidity ratio for net domestic demand incremental and time liabilities has been significantly reduced.
The replacement of the ad hoc treasury bill system by the RBI to cover temporary imbalances in public revenue and expenditure with a Ways and Means advance system was introduced to serve as an effective ceiling for the automatic monetization of the budget deficit and to create a favourable macroeconomic condition for the definition of a “monetary target”. An insurance regulator has been set up. The Indian Ocean Rim Association for Regional Cooperation was recently established with 13 other countries in the region. The Association`s Charter was adopted in March 1997. Economic cooperation must take place in the areas of trade facilitation, promotion and liberalization, promotion of foreign investment, scientific and technological cooperation, tourism, the free movement of individuals and service providers, and the development of infrastructure and human resources. An enabling clause to identify other areas of cooperation is also included. India has also signed sub-regional agreements with Nepal, Bangladesh, Myanmar and Bhutan, most recently with Bangladesh, Sri Lanka and Thailand. Details of the agreement, known as BISTEC, are being worked out. India attaches importance to its participation in regional agreements under multilateral rules. India played an important role in the creation of the South Asian Regional Cooperation Association (SAARC), whose main success in 1995 was the conclusion of trade preference negotiations under the SAARC Preferential Trading Arrangement (SAPTA).