Periscope.(meshed briefs)(Interview)

Byline: George Wehrfritz (Rana Foroohar Michael Hirsh, Mark Hosenball and John Barry Michael Isikoff Holly Bailey Lorraine Ali Karen Springen)

India: Let Your Money Free A U.S. delegation led by Sen. Charles Schumer met with officials in Beijing last week to discuss tensions over China's undervalued currency, which makes its exports cheaper. And while a confrontation was temporarily averted, no concrete progress was made. "Things are better than they were a week ago," said Schumer. "But the jury is out." Not so in India, where Prime Minister Manmohan Singh last week proposed full convertibility of the rupee. Such a move would put Asia's second emerging giant on course to challenge big brother China in the vital area of export-led manufacturing. Already, analysts say it's Singh's most dramatic initiative since he began to dismantle a bureaucratic and corrupt regulatory system known as the "License Raj" as Finance minister in the early 1990s.

Rupee convertibility would cut through yet more red tape. For starters, Indian investors could legally remit funds abroad to buy everything from stocks to Manhattan co-ops. Likewise, foreign investors could convert their dollars, euros or yen into rupees to build factories or buy shares in listed companies without the central bank's approval. Today, China's inward FDI flow is 10 times that of India, but that could change quickly once financial regulators lose their power to vet every deal.

The downside is capital flight: Indians dissatisfied with local interest rates could simply shift wealth overseas. New Delhi seems confident the risks are minor. In a policy address on March 16, Singh said India would soon raise its …