NEW DELHI: The Rajya Sabha Select Committee on Wednesday submitted its report on the long-pending Insurance Bill. The report has recommended a composite cap of 49 per cent on foreign investment in insurance. The cap is inclusive of FDI and foreign portfolio investment.
Commenting on the report, Mythili Bhusnurmath, Consulting Editor of ET Now said, “Raising cap in insurance to 49% will be positive for the industry.”
Welcoming the report HDFC Life said that the hike in FDI limit will allow industry to raise more capital. “Hike in FDI cap in insurance will give a fillip to the industry. Insurance companies with lower level of maturity may do well with FDI,” said HDFC Life.
Finance Minister Arun Jaitley had said in his maiden budget speech in July that the “composite cap” in the insurance sector should be increased to 49 per cent from the current level of 26 per cent, with full Indian management and control.
The Bill’s passage into law — once cleared by the Upper House and approved by the President — will bolster the Narendra Modi government’s economic reform credentials.
Along with the goods & services tax (GST), this is one of the reform measures most closely watched by international investors and, if passed, will be read as an affirmation of the Narendra Modi government’s resolve to speed up economic liberalisation.
The government is keen to push the legislation through in the winter session of Parliament, which ends on December 23. Members had been given until Tuesday evening to formally present any dissent notes.
Finance Minister Arun Jaitley said on Monday that he was hopeful insurance market expansion would take place once the Bill was passed by Parliament. In a statement, he expressed his sense of satisfaction over the recommendations made by the parliamentary select committee. The cash-starved insurance sector has been demanding further liberalisation of the foreign investment limit and has pegged capital needs at more than Rs 50,000 crore.
Courtesy: ET