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Hike in FDI Limits Set to Boost Insurance sector

October 21 2014

Financial Services Secretary, Mr. G.S. Sandhu recently stated that the new Government seeks to increase Foreign Direct Investment (FDI) in the insurance sector. Speaking to newspaper representatives during 'TIEcon Delhi 2014', he said, "We are already working on building consensus for this Bill so that the FDI limit can be hiked to 49 per cent".

"Such a hike could attract an inflow of $5 billion in the next five years', he said, "The bill is pending approval and should be passed in the Winter Session of the Parliament'. He also shared that the estimated inflow amount does not refer to Pension Funds.

FDI limit in insurance sector is currently capped at 26%. Influx of foreign capital in this sector will be cheered by private insurers, promoters and investors alike. These stake holders look forward to booking profits by selling their stake to overseas investors.

The proposed hike could augment investment levels, boosting the insurance sector with higher income and employment opportunities in long term. A similar hike in the permissible limits of FDI could be seen in the Pension sector if the insurance sector gets a green signal.

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