It is expected that the Union Budget 2021 is going to come up with a proposal of increasing the FDI limit in insurance sector. The increased limit is expected to be at 74 percent from the previous limit of 49 percent now.
However, according to the sources, political parties like the BJP leaders and also NDA aren’t in favor of this proposal.
Previously, the bill regarding earlier limit of 49 percent, almost took seven years to pass. Before the previous rate the limit was even lower at 26 percent.
Although the bill finally passed in 2015 but it couldn’t meet up the expectations regarding the foreign inflows.
However, in the recent scenario the Belgian multinational insurer Ageas acquired a 23 percent share ownership from IDBI Bank in IDBI Federal Life Insurance.
The deal was done under Rs 460 crore leading to a 49 percent share ownership of Ageas.
The government is now paying heed to retain the “Indian management control” clause to ensure the strategic powers.
It can be concluded that the Indian Government is looking forward for implementing this 74 percent FDI proposal.
However, even if once the bill gets passed it will still require a ratification through a change in the Insurance Laws (Amendment) Act, 2015. FDI will increase only if both the Parliament Houses pass this bill.
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