The expert committee on making Mumbai an international financial centre, chaired by former World Bank economist Percy S Mistry, has offered a package of radical recommendations ranging from full rupee float by 2008 to the abolition of the securities transaction tax and doing away with restrictions on foreign investment in sovereign bonds.

The 15-member committee, which was set up following a Budget announcement by Finance Minister P Chidambaram, has also recommended the imposition of a goods and service tax on financial services, and creation of a currency spot market and rupee-settled exchange traded currency derivatives market.

The call for full convertibility by next year takes forward the second committee report by former Reserve Bank deputy governor S S Tarapore, which recommends a five-year timeframe.

"Having considered the recommendations of the Tarapore-2 Committee report carefully, the expert committee nevertheless recommends that full capital convertibility should be achieved within a time-bound period of the next 18-24 months and by no later than the end of calendar 2008," the report said.

The committee's report was preceded by some controversy after Mistry resigned on February 7 following differences with the committee over describing government-owned banks as "zombie banks," a term used for banks that are dependent on government hand-outs.

Other members included ICICI Bank Chief Executive KV Kamath and UTI Bank Chairman PJ Nayak.

The report has said that moving towards export of financial services from India is synonymous with developing Mumbai as a financial hub, making it vital to remove domestic entry barriers, trade barriers and barriers to FDI.

The report envisions a first phase, from 2007-2012, when Mumbai will connect India's financial system to the world's financial markets.

In the second phase, from 2012-2020, the megapolis would develop the capacity to join London, New York and Singapore as one of the top global financial hubs.

Seeking radical improvement in infrastructure, the report has said that Mumbai needs to become a first-world city that can attract the world's brightest minds by being an "attractive place to live, work and play".