| The government has decided to wait for a consensus on hiking the foreign investment limit in the insurance sector to 49 per cent before acting on the Budget announcement.
|
| |
| The move follows reservations expressed by certain ministries regarding the reputation of some foreign players that have set up joint ventures in India.
|
| |
| Finance ministry officials said the United Progressive Alliance government was trying to first build a consensus with the Left parties, which were opposing the move.
|
| |
| They also said the government would not immediately rewrite the Insurance Act, 1938, as was planned earlier. “If there is a political consensus on the issue, we will merely amend the law and then take up the issue of a new legislation,” an official said.
|
| |
| The government had in the Budget for 2004-05 announced its intention to raise the foreign investment limit in the insurance, telecom and civil aviation sectors.
|
| |
| The issue of hiking the foreign direct investment (FDI) cap in telecom is already under the lens on account of management control and security concerns.
|
| |
| The arguments being put forth against permitting higher FDI limits in the insurance sector includes the implications for resource mobilisation, as public sector companies invest heavily in infrastructure projects.
|
| |
| In case of the Life Insurance Corporation of India, which manages assets of over Rs 3,00,000 crore, over 85 per cent of the investments are in government paper. A section in the government also feels some foreign partners in Indian joint ventures are reinsuring with their international parents. |
| |
|
| |
Content Guide
