New Delhi, Jan 14: Foreign direct investment limit in insurance sector is likely to be hiked to 49 per cent only after the Lok Sabha elections. The move, which is expected to facilitate more capital inflow and fuel growth in the insurance sector, would provide relief to some of the Indian promoters and enable foreign players to increase their stake to over 26 per cent in joint ventures.
After a proposal from finance ministry last year, the Department of Industrial Policy and Promotion (DIPP) has sent a consolidated proposal to the group of ministers for hiking FDI limits in aviation, telecom and insurance.
Although the GoM has already taken a decision on aviation and telecom, a final view on insurance is yet to be taken as it would involve legislative amendments, a senior finance ministry official told reporters here today.
"The finance ministry is in favour of hiking the FDI limit in insurance from 26 to 49 per cent. But it would require legislative changes. It would not be possible before the Lok Sabha election is over," he said.
Once, the GoM approves the proposal, it will be taken up by the cabinet and then parliament's nod would be sought for necessary amendments in IRDA Act to be carried out to raise the FDI ceiling.
Moreover, the law commission in consultation with finance ministry and Insurance Regulatory and Development Authority is giving final touches to a comprehensive insurance act by merging the insurance act of 1938 and IRDA Act of 1999 and over-haul outdated legislations, sources said, adding IRDA may be mandated to fix FDI limit as and when desired.
Bureau Report