Cabinet clears insurance FDI to 49%
25 July 2014 5:39 AM IST
The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved 49 per cent foreign investment through the Foreign Investment Promotion Board (FIPB) route, to ensure that management control remained in the hands of Indian promoters.
The CCEA meeting presided by prime minister Narendra Modi on Thursday decided to bring amendment to the long pending Insurance Laws (Amendment) Bill to raise. The decision, however, has invited severe criticism from the opposition which claimed that the move could be disastrous. Reacting over increasing the FDI cap in the insurance sector, CPI leader Gurudas Dasgupta said, ‘The decision is dangerous for our country. Foreign companies with investment in this sector are unsafe. Its worst effect was experienced world over. This is a dangerous move and I opposed the decision taken by the CCEA.’
Congress leader Rajiv Shukla said, ‘The government is doing the same thing which the previous UPA government was trying to do. I can only laugh at it. When we were mooting this idea, the standing committee headed by BJP leader Yashwant Sinha had opposed it. Now they are doing the same thing which the Congress was trying to push at that time.’ However, Biju Janata Dal (BJD) leader Jay Panda welcomed the decision and said that the insurance sector needs foreign investments.
Trinamool Congress leader Saugata Roy said, ‘We will vote against it. We shall oppose it keeping in view the security concerns of the ordinary people. We hope that we will be able to defeat this bill in Parliament.’
The decision to increase the FDI cap was in the pipeline. Sources said for up to 26 per cent FDI in insurance, the FIPB nod would not be needed, but for the 49 per cent limit, the board’s approval would be needed. Many feel the move would help insurance firms to get much needed capital from overseas partners.
It was learnt that the life insurance penetration in India is a little more than 3.2 per cent of gross domestic product in terms of total premiums recorded per year. The figure is less compared to other countries. Experts feel that increase in the FDI cap will help the insurance sector in tapping deep into India’s market especially in the rural sector. Also, this could boost job creation in the sector. Higher capital will help insurance companies to tap under-insured markets through better infrastructure and more manpower.
The CCEA meeting presided by prime minister Narendra Modi on Thursday decided to bring amendment to the long pending Insurance Laws (Amendment) Bill to raise. The decision, however, has invited severe criticism from the opposition which claimed that the move could be disastrous. Reacting over increasing the FDI cap in the insurance sector, CPI leader Gurudas Dasgupta said, ‘The decision is dangerous for our country. Foreign companies with investment in this sector are unsafe. Its worst effect was experienced world over. This is a dangerous move and I opposed the decision taken by the CCEA.’
Congress leader Rajiv Shukla said, ‘The government is doing the same thing which the previous UPA government was trying to do. I can only laugh at it. When we were mooting this idea, the standing committee headed by BJP leader Yashwant Sinha had opposed it. Now they are doing the same thing which the Congress was trying to push at that time.’ However, Biju Janata Dal (BJD) leader Jay Panda welcomed the decision and said that the insurance sector needs foreign investments.
Trinamool Congress leader Saugata Roy said, ‘We will vote against it. We shall oppose it keeping in view the security concerns of the ordinary people. We hope that we will be able to defeat this bill in Parliament.’
The decision to increase the FDI cap was in the pipeline. Sources said for up to 26 per cent FDI in insurance, the FIPB nod would not be needed, but for the 49 per cent limit, the board’s approval would be needed. Many feel the move would help insurance firms to get much needed capital from overseas partners.
It was learnt that the life insurance penetration in India is a little more than 3.2 per cent of gross domestic product in terms of total premiums recorded per year. The figure is less compared to other countries. Experts feel that increase in the FDI cap will help the insurance sector in tapping deep into India’s market especially in the rural sector. Also, this could boost job creation in the sector. Higher capital will help insurance companies to tap under-insured markets through better infrastructure and more manpower.
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