News: Govt to hike insurance FDI to 49%

(IM 11/12/2006) Mumbai - The hike in Foreign Direct Investment (FDI) is taking longer time to materialize than expected. Since budget 2004-05, a bill to this effect has not been considered as yet in the parliament.

The opposition from the Left is so strong that the current session of the parliament may possibly pass by without any final decision made on the FDI hike. Under the present scenario, in a joint venture of an insurance company, the foreign partner can hold a stake of 26% only. More and more insurance companies are pressing for the much-awaited FDI hike to 49%, so that they can infuse more capital.

However, all said and done, the government is considering to raise the FDI limit soon. Since the time the insurance sector has opened up, insurance penetration has grown with reasonable profits made in the business underwritten, new premiums, etc.