New Delhi: An Indian Parliamentary panel on Tuesday urged the government to simplify foreign investment rules and give tax holidays to investors ploughing funds into the cash-strapped infrastructure sector.

Unveiling its report, the committee stressed the importance of shedding the layers of bureaucracy and red tape that hamper investments. “The Central along with the state governments should strive towards simplification of legislation, proper implementation of laws and removal of red-tapism,” it said.

“A full-fledged campaign should be launched, with attractive schemes like tax holidays for heavy investments in power and infrastructure.”

India needs an estimated $ 252 billion in investment over the next decade to generate an additional 100,000 megawatts of power. The Standing Committee on Commerce recommended “a single-window clearance” for foreign direct investment (FDI) through a body comprising officials from the Central and state governments.

“After clearance from this body, no administrative difficulties should come in the way of foreign investors. They should be monitored and not harassed.”

It also said that New Delhi should give special incentives to foreign investors opening factories in poorer areas.

The flow of foreign capital into Indian states is highly varied, with prosperous regions such as Maharashtra, Karnataka, Gujarat and Uttar Pradesh enjoying the bulk of investment.

According to a Commerce Ministry annual report, FDI in 2000 rose by 15 per cent to Rs 193.4 billion ($ 4.2 billion) from the previous year.

This figure was less than half the government's target of $ 10 billion, and only 10 per cent of the amount China was estimated to have received.

The report also stated that in the decade since the start of India's economic liberalisation, the country only attracted foreign investment worth $ 23.7 billion, a little more than the amount China receives in six months.

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