Finance Ministry is contemplating raising FDI cap in insurance sector from 26 per cent to 49 per cent with some riders like restriction on voting right.
“We might increase FDI cap in insurance without commensurate increase in voting rights. We talked with stakeholders and also held high level meeting in ministry,” a senior ministry official said.
The official further said that the government may raise the FDI cap in the sector gradually beginning with non-life and health followed by life insurance segment.
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A proposal to hike the FDI cap in the sector was mooted by the previous United Progressive Alliance government and has been pending in Parliament since 2008.
The ruling Bharatiya Janata Party had opposed raising the FDI cap in the insurance sector from 26 per cent to 49 per cent.
The Standing Committee on Finance had earlier rejected the proposal, saying it may not have the desired effect and could expose the economy to global vulnerability.
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Last week Financial Services Secretary G.S. Sandhu gave a presentation to Finance Minister Arun Jaitley on the issues concerning the insurance sector.
The insurance sector was opened up to the private sector in 2000 after the enactment of the Insurance Regulatory and Development Authority Act, 1999.
The insurance industry has sought an increase in the FDI limit to raise funds for expansion.