Union Finance Minister and Congress leader Pranab Mukherjee, in an interview to NDTV, conveyed that the existing 26 per cent cap on Foreign Direct Investment (FDI) in the insurance sector will be raised.
Speaking at the Indo-US CEO forum in Washington, Mukherjee stated, “We have committed to allow 49 per cent and the necessary legislation is pending before the House, as the leg process will be completed it will be done...in a year or so”.
Although the UPA in 2004, had expressed its intentions of raising this cap, some strong resistance from the Left during UPA-1 ensured that the matter went in to cold storage.
The Insurance Amendment Bill, that will raise the FDI cap to 49 per cent, is pending before the Parliament since 2008.
The news will bring joy to several beleaguered private insurers as it will facilitate the industry to go public, bringing much-needed respite to them.
In fact, most foreign players have already shown their intent to raise their shareholding in the currently existing joint ventures, and many of them have already quoted prices for buying additional stakes.