India to raise FDI limit in insurance companies to 74% |
Indian government may raise the overseas investment limit in insurance to 74% in the February budget, up from 49% now, possibly paving the way for foreign control of companies. The Insurance Regulatory and Development Authority of India - IRDAI, sought the views of various stakeholders on the matter in a December 2 letter at the direction of the government. The letter to insurance companies and others have called for suggestions on raising the foreign direct investment limit. The Modi government is seriously contemplating opening up the sector as it wants long term stable money to be invested in the country. IRDAI is seeking inputs from industry people on government instructions and a report is expected to be submitted soon. 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. It`s been proposed that the stake limit could be raised to 74% over time. In order to facilitate the higher investment limit, the government will have to amend the Insurance Act, alter provisions pertaining to Indian ownership, monitor the solvency of foreign firms so that the local business is unaffected by any challenges faced by the parent firm and that they stick around to honour long Âterm contracts.
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