D. Raja, national secretary of the Communist Party of India, told Reuters the rupee was not such a strong currency that the country could open up the capital account further.

"I do not think this step is in our interest. It will only help speculative capital and moreover the experience of many developed countries on this issue has not been positive," Raja said. "We must be realistic."

A road map to greater capital account convertibility drawn up by an expert panel was released by the Reserve Bank of India late on Friday.

It outlines a three-phase plan extending to 2010/11 which would allow greater movement of capital in and out of the local currency.

Asked whether the communists, who support India's coalition government from outside, will oppose any move to accept the convertibility report, Raja said: "They may discuss it with us but we will tell them that we don't think it appropriate for us to go for convertibility."

The expert panel also suggested barring foreign funds from investing in Indian shares through participatory notes, which allows overseas investors to buy local securities without registering with regulators.