The Indian government are drawing up plans for a huge economic liberalisation plan which could create new opportunities for British companies.

Finance secretary Pranab Mukherjee has said that India needs to invite foreign companies, including insurance and engineering firms, to help modernise the economy.

His reforms would also overhaul the country's strictly regulated labour market and allow companies to increase working hours and make staff redundant without government approval.

Mr Mukherjee wants to privatise the coal industry, lift price controls on petrol and allow private overseas companies to provide passenger services on nationalised railways.

He will also allow foreign supermarkets such as Tesco to start trading in their own name and hope that by doing so they will improve India's backward food distribution and introduce modern refrigerated transportation of produce much of which currently rots before it reaches market.

The government predict that by opening up to overseas investment and expertise, India will soon overtake China as the world's fastest growing economy.