GOVT MAY HIKE FDI IN INSURANCE TO 49% VIA AUTOMATIC ROUTE

The government may allow foreign insurers to increase stake in Indian JVs (Joint Ventures) via the automatic route from current 26 percent to 49 percent, in the upcoming budget session of the parliament, said reports.

Currently, FDI (foreign direct investment) via automatic route is limited to 26 percent post which FIPB’ s (Foreign Investment Promotion Board’ s) approval is required.   It was speculated that the move could attract FDI worth $1 billion to $3 billion to the sector and make India an attractive destination for global insurance stars such as Llyod’ s and Berkshire Hathway.

Increased foreign participation and investments is good for the sector as insurance penetration in India stands at a meager 3.9 percent, which is amongst the lowest in the world.

The year 2015 saw many foreign insurers increase their stake in domestic JVs after the parliament increased FDI ceiling in domestic insurance companies from 26 percent to 49 percent.

 

Source – Insurance Club

Date – 25th February , 2016.

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