Months after allowing 100% foreign direct investment (FDI) in insurance intermediaries, the government is considering raising the limit for foreign direct investment in insurance companies.
“The FDI limit in insurance companies could be hiked. The issue is being discussed," a senior government official Mint.
Currently, FDI in the insurance sector is capped at 49% under automatic route, including for insurance broking, insurance companies, third party administrators, surveyors, and loss assessors.
According to a report in The Economic Times, the government may raise the overseas investment limit in insurance to 74%, up from 49%, and the announcement could be a part of the Union Budget for fiscal 2021, to be presented in February. The report said the insurance regulator has sought views from various stakeholders on the matter.
In the Union Budget for fiscal 2020, finance minister Nirmala Sitharaman had said the government will examine suggestions of opening up FDI in insurance sector in consultation with all stakeholders. Besides, foreign investment in insurance intermediaries was increased to help foreign brokerages buy into Indian companies and deepen the market in terms of new products and technology. The idea was to bring in global products, practices, and sales strategies to India’s insurance market.
In August, the Union Cabinet cleared changes in FDI regulations, including easing of rules for foreign single-brand stores and permitting FDI through the automatic route in contract manufacturing and all areas of coal mining, to make India a more attractive investment destination, aimed at job generation and growth.