Rajya Sabha passes Insurance Amendment Bill to increase FDI limit to 74%

New Delhi, Mar 19: The Rajya Sabha passed the Insurance Amendment Bill 2021 to hike foreign direct investment (FDI) in the insurance sector to 74 percent from the current 49 percent.

 

The Bill provides to increase the foreign direct investment limit from existing 49 percent to 74 percent. It also has a provision for removal of restrictions on ownership and control of the insurance companies.

 

 

 

Replying to a discussion, Finance Minister Nirmala Sitharaman said, that a higher FDI limit of 74 per cent is not a compulsion for every insurance company, as it sets only an upper limit. She clarified that increasing the limit does not mean automatic foreign investment to that level to all companies, and each and every company will decide the limit of investment.

 

 

Responding to members' questions with regard to reservation policy, the minister assured the upper house that the government is fully committed to social justice and existing reservation policy will continue in the insurance sector.

 

 

Earlier in Budget 2021, the Union FM had increased FDI limit in the insurance sector from 49 percent to 74 percent. In March 2021, the Union Cabinet also gave its nod for amendments in the Insurance Act, which paved the way for 74 percent FDI in the insurance sector.

 

In 2015, PM Narendra Modi-led government hiked the FDI cap in the insurance sector from 26 percent to 49 percent, stating that the move would improve life insurance penetration in the country.