New Delhi: NDA-led Prime Minister Narendra Modi’s government had approved an Ordinance on Wednesday to hike Foreign Direct Investment (FDI) cap in the insurance to 49% from 26%.
Notify that legislation could not able to pass the Ordinance in the Winter Session of Parliament which ended on Tuesday.
After the Union Cabinet which Prime Minister Narendra Modi headed, a source said, “The Cabinet has cleared the Ordinance on insurance sector.”
At present, there are 52 insurance companies operating in India, of which 24 are in the life insurance business and 28 in general insurance business.
The Insurance Bill had been pending since 2008 in the Rajya Sabha. The bill seeks to increase the composite foreign investment limit in insurance companies to 49% from current level of 26%.
The 49% cap would include both FDI and foreign portfolio investments.
Up to USD 7-8 billion (about 50,000 crore) from overseas investors may hike in the foreign investment limit in the insurance sector which gives a major boost to the segment.
The total capital deployed in the private life insurance sector is close to Rs 35,000 crore. At FDI at 26%, foreign equity is close to Rs 8,700 crore.
Amid approved by the Select Committee of the Upper House, Insurance Laws Amendment Bill, 2008 could not be taken up for discussion because of the uproar by opposition parties over the conversion and other issues.
Modi government had alleged that political obstructionism are the reason for the disruption of Rajya Sabha and claimed that ruling NDA does not have a majority.
Bureau Report
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