Besides, other proposals to ease FDI rules for the sector, such as the mandate to have Indians in certain segments of the top management, are also being reviewed, officials privy to the talks told TOI.Apart from FDI, a comprehensive set of amendments to the law are also proposed although the bill timing is yet to be decided. The department for promotion of industry and internal trade, too, is undertaking a review of sectoral norms and rules to ensure that investments come unbridled. Insurance is among one of the consumer-facing sectors that remains only partially open to FDI, while other sectors have all moved on.
‘No threat to Indian insurers with detailed guidelines’
Given that most large Indian companies and conglomerates have already invested in the insurance sector, officials said, it is time to allow 100% FDI in the sector since several foreign players with deep pockets are willing to come into the country but are not able to find a matching domestic player. A 100% limit will be especially beneficial for the long-gestation life insurance business where the promoter needs to keep capitalising the company to meet the solvency norms prescribed by the regulator. As a result, only promoters with deep pockets can enter space as it requires a constant flow of funds till the company starts generating profits.
“It is almost 25 years since the sector was opened up and despite an increase in the limit, we still have strong Indian players in the business. There does not appear to be any threat especially when there are detailed guidelines and the regulator keeps a close watch on all the players,” a second source said. There are several checks and balances on overseas investments and repatriation apart from the capitalisation norms which act as a safety valve, sources said.
A senior finance ministry official said that amendments to the law are being discussed with the Insurance Regulatory and Development Authority of India (Irdai) and they would be finalised soon.
Given that BJP’s strength in Lok Sabha is below the majority mark, the political leadership will have the final say on the issue, although NDA partners may not have a problem with the plan.
