The Group of Ministers (GoM) has finalised its recommendations on insurance sector reforms which include raising the foreign investment ceiling in the industry to 49% from the existing 26%.
Besides increasing the foreign investment cap, other proposed amendments would allow Indian promoters to continue to hold a majority stake in insurance companies. They would also allow public sector non-life insurers to sell a minority stake to raise capital. The proposed revisions would enable foreign reinsurance companies to enter the Indian market as well.
The reforms will require amendments to the Insurance Act, 1938; LIC Act, 1956; IRDA Act, 1999; and General Insurance Business (Nationalisation) Act, 1972.
The proposed changes, which were finalised this week, have been sent to Prime Minister Manmohan Singh. The draft amendment Bill is likely to be taken up shortly by the Cabinet for approval, after which it will be tabled in Parliament in the next sitting scheduled to begin on 17 October.
The Insurance Bill was previously tabled to the Cabinet in 2006. But in the face of opposition from leftist parties, the government set up the GoM headed by External Affairs Minister Pranab Mukherjee to examine the contentious issue of allowing more foreign investment in the insurance sector.
