With foreign direct investment (FDI) limit in insurance set to go up to 49% from the current 26%, several global insurance giants are likely to revive their plans to enter the under-penetrated Indian market.
Canada-based Manulife and South Korea’s Samsung Life among others are likely to scout for partners in India, an industry source, who did not wish to be identified, told HT.
Global insurance firms including Metlife, Aegon, Prudential are already present in India.
While the government has failed to get the insurance bill introduced in Parliament in the recently concluded budget session, it has sent it to the select committee in keeping with the Opposition’s demand. Finance minister Arun Jaitley has asked the committee to submit its report by the last day of the first week of the next session. Jaitley has expressed hope that the bill will be taken up during the winter session of Parliament.
While the FDI limit will be raised to 49%, the management control of these firms will remain with Indian promoters for now.
"Due to the delay in the government’s part to increase the FDI limit, most insurers decided to shelve their plans…now with the new government moving fast on raising the FDI limit, these big players would come into the market," the source said.
According estimates by consulting firm KPMG, the move is likely to result in foreign inflows of up to Rs. 25,000 crore.
"Once there is proper clarity on the interpretation of control by the Indian promoter, additional foreign capital expected across life, health and general insurance companies between Rs. 20,000 and Rs. 25,000 crore," partner Shashwat Sharma, KPMG, had earlier said.
In 2000, the insurance sector was opened up for private players after the enactment of the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999).