Govt increases FDI in insurance to 49% through automatic route
In yet another effort to bring more foreign players into India’s vast insurance market, the government on Friday liberalised the FDI norms for the sector and extended the investment limit to 49% without prior approval. Earlier, an overseas company was allowed to buy up to 26% stake in an India-based insurance company. But, for up to 49% the investor had to take prior approval from the Foreign Investment Promotion Board (FIPB). However in its latest notification the Govt. said, "The foreign investment proposals up to 49% of the total paid up equity of the Indian insurance company shall be allowed on the automatic route subject to verification by the Insurance Regulatory and Development Authority of India.” In January, a survey released by the Associated Chambers of Commerce & Industry of India (ASSOCHAM) had predicted over Rs.12,000 crore investments in the country’s insurance sector. The body had said that more than a dozen foreign companies were planning to initiate a joint venture with some of the Indian insurance majors. Last year, several companies including France’s AXA, Japan’s Nippon Life Insurance and the UK’s Bupa had agreed to raise their stakes with their Indian counterparts. In January this year, the government’s inter-ministerial panel had approved a Rs.1705 crore proposal of HDFC Standards Life Insurance Company to increase the share of Standard Life of UK to 35% in the joint venture. Currently, India has 52 insurance companies - 28 in general insurance and 24 in life insurance businesses – operational in India’s insurance market.
March 19, 2016 | 05:30pm IST
to success.