Players in the insurance sector in India have expressed surprise that more liberal foreign direct investment (FDI) rules in the industry failed to gain any mention in the Budget 2020-21 which was unveiled last week.
The government’s silence on the issue is unexpected because officials had been working on the proposal for six to eight months, reported The Indian Express. A government document had proposed that FDI up to 74% should be allowed with necessary government approvals, above the current 49% limit permitted under a so-called automatic-approval route.

The domestic insurance industry had eagerly waited for Finance Minister Nirmala Sitharaman to raise the FDI ceiling in her Budget speech on 1 February.

The government last year allowed 100% FDI in insurance intermediaries like brokers and third party administrators, as a precursor to the hike in the FDI cap to 74% for insurers.

“The timing for such a move was quite ripe as not only does the government want a larger FDI inflow into the country, the private sector insurance industry also is badly in need for capital to maintain growth,” said an official.

The Life Insurance Council, in a pre-Budget survey, had found that all life insurance players favoured the higher FDI ceiling of 74% and some even wished for 100%.

Leave a Reply

e: [email protected] | t: +852-8191-5120 (hong kong) | t2: 050-5806-7296 (from japan)