FDI in Insurance to Increase from Current 49 percent to 74 percent

CIOReviewIndia Team | Friday, 13 December 2019, 06:36 IST

FDI in Insurance to Increase from Current 49 percent to 74 percent

According to a report by The Economic Times, the government is planning on increasing the overseas investment limit in insurance from the present 49 percent to 74 percent in the upcoming February Budget. In order to seek some assistance regarding the matter, IRDAI (Insurance Regulatory and Development Authority of India) has approached various insurance companies on December 2nd. Only few months back, Government of India, in a bid to allow foreign brokerages to increase their stakes in Indian companies and make inroads into the market with new products and technology - has allowed 100 percent direct investment (FDI) in insurance intermediaries.   

As told to the newspaper by a person related to the development, “IRDAI is seeking inputs from industry people on government instructions and a report is expected to be submitted soon. The government is seriously contemplating opening up the sector as it wants long-term stable money to be invested in the country. If all goes well, the government is planning to introduce this as part of the budget announcement and take a shortcut so that it gets Parliament’s nod as part of the Finance Bill.”

The finance minister, Nirmala Sitharaman, during the July Budget had also announced that the government will look into the suggestions of various stakeholders for opening FDI in the insurance sector.  Amendments in FDI policy will significantly impact across industries - insurance, contract manufacturing, digital media, and information utilities. 

To drive higher investment, one of the official also stated that the government has to actually amend Insurance Act so as to secure local business by monitoring the solvency of foreign firms. Moreover, regulatory centre also gathered initial inputs that showed the changes would be focused on securing policy holders’ rights in case the insurer is foreign owned and exercising long-term liability contracts on overseas owners.

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