Indian Finance Minister P. Chidambaram said Wednesday that his country will further liberalize its economy to attract more foreign investment, including the lucrative retail sector which has so far virtually closed to foreign investors.

Chidambaram told reporters that the Indian economy could still grow 5.5 to 6 percent in the current fiscal year, higher than 5 percent of the previous year, despite slowdown.

The minister said the government would also clarify the foreign direct investment (FDI) regulations in multi-brand retail, saying the commerce ministry is in the last leg of clarifying the policy.

India has been seeing a continuous slump of the rupee against the US dollar and shrinking export and industrial production this year.

Meanwhile, some foreign corporations, including US retail giant Walmart, have cancelled plan to invest in India this year due to red tape and other policy barriers, including lack of transparency.

The Indian government last year said it would allow a 51 percent FDI in retail sector, resulting in strong opposition from other parties and the public.

Chidambaram also said the government would raise import duty on luxury goods while seeking to increase export.

The current account deficit has increased to nearly 5 percent of the GDP due to subsidies for fuel and other strategic goods imported from abroad.

India has recently opened telecom market to 100 percent foreign direct investment while loosening control over foreign competition in defense, aviation and insurance sectors.