India: FDI in insurance increased to 49% - July 2014
Published 14 July 2014
© Crown copyright 2014
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/india-fdi-in-insurance-increased-to-49-july-2014--2/india-fdi-in-insurance-increased-to-49-july-2014--2
0.1 Detail
A composite FDI limit means the combined limit for Foreign Direct Investment, Non-Resident Indians and Foreign Institutional Investment will be capped at 49%. Currently, FDI up to 26% is permitted through the automatic route (without government approval), subject to approval by the Insurance Regulatory and Development Authority (IRDA). An increase in FDI beyond 26% will however require Foreign Investment Promotion Board (FIPB) approval. The FIPB is authorised to clear investments up to Rs.120bn (£1.2bn), investments over this limit will need to be cleared by the Cabinet.
Along with the announcement of the hike in FDI limit in insurance to 49%, the Finance Minister mentioned that the Insurance Laws Amendment Bill which has been pending since 2008 will be taken up in parliament. Apart from allowing an increase in the FDI limit, the passage of the bill in its current form would also facilitate the overhaul of archaic laws and permit the entry of Lloyds and other international re-insurers.
The Pension Fund Regulatory and Development Authority (PFRDA) bill was passed in September 2013 which permitted FDI up to 26% in the pensions sector. The PFRDA bill had provided for allowing FDI in pensions, similar to the insurance sector. Hence an increase in FDI in the insurance sector automatically implies similar terms for the pensions sector.
0.2 Comment
The insurance sector was originally opened to private participation in 1999 and subsequently to foreign investment (up to 26%) in 2000. Markets are expecting an inflow of US$10-15bn on account of relaxation of the FDI limit in insurance.
0.3 Disclaimer
The purpose of the FCO Country Update(s) for Business (”the Report”) prepared by UK Trade & Investment (UKTI) is to provide information and related comment to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.