The government will set up a regulatory framework for infrastructure to create the necessary environment to attract $150 billion foreign direct investment in the sector for achieving 7-8 per cent growth, Prime Minister Manmohan Singh announced on Tuesday.

"We are working towards the creation of a regulatory framework in infrastructure sector that would be transparent and independent and based on international best practices," he said inaugurating the third India-ASEAN business summit in New Delhi.

"We believe the Indian economy can absorb up to $ 150 billion of foreign direct investment in the infrastructure sector over the next ten years. We have to create the right environment in which public-private partnership can thrive," he said. This was necessary not only for efficient use of our resources but also efficient management and running of infrastructural services, he said.

The government has also decided to step up economic growth to 7-8 per cent over the next decade and for this, every effort would be made to promote investment by creating a climate conducive to investors, he said.

"I recognise that for investment to flow, improvements are required in our physical infrastructure and this area will receive the higher priority of government," he said. Singh added that acceleration of economic growth will require substantial increase in volume of investment not only from abroad but domestic as well.

Stressing that capital requirements in infrastructure were very large, he said railways alone needed $55 billion in the next 10 years, power and telecom $75 billion and $25 billion, respectively, in the next five years.

This, he said, provided a large window of opportunity for ASEAN business to invest in India. Equally, Indian business must invest in South East Asia, he said, adding, "We have some attractive examples of successful Indian enterprise in the region. We need more, especially in the newly industrialising economies of ASEAN where opportunities for new investment are presenting themselves."

Indian business must be more proactive in exploring markets and investment opportunities in South Asia and to build long-term relationship across the region, he said. He asked the state governments also to be pro-active in developing mutually beneficial cooperation with the ASEAN region.