The Rajya Sabha has given its go ahead to the much awaited insurance bill, paving way for the implementation of 74% foreign direct investment (FDI) in the insurance sector.
With this, the Indian insurance industry can witness fresh inflows of foreign capital. The move is also expected to improve penetration of life, health and motor insurance policies. Further, the bill will enable innovation, technological advantage and increase competition in the industry.
In the bill, the government said, “To achieve the objective of government’s foreign direct investment policy of supplementing domestic long-term capital, technology and skills for the growth of the economy and the insurance sector, and thereby enhance insurance penetration and social protection, it has been decided to raise the limit of foreign investment in Indian insurance companies from the existing 49% to 74%.”
In Budget 2021, the finance minister proposed increasing the cap on FDI in insurance sector from 49% to 74%.