Finance Minister Nirmala Sitharaman on Monday proposed increasing the foreign direct investment limit in insurance from 49 per cent to 74 per cent in the budget 2021-22. Currently, the FDI limit is capped at 49 per cent.
She added that foreign companies will be allowed to own insurance companies subject to conditions. The finance minister proposed an amendment to the Insurance Act for the same.
Raising the investment cap in insurance companies was one of the key demands of various global investors after the government had amended the FDI policy to allow 100 per cent foreign investment in insurance intermediaries such as insurance agents, web aggregators of insurance policies and brokers in last year's budget.
While such a move would help insurers attract more capital to expand business, it would also potentially boost the government’s divestment programme.
