During the presentation of Budget 2014-15, Union Finance Minister Arun Jaitley announced the proposal to raise the foreign direct investment (FDI) ceiling in the insurance sector from current 26% to 49%.
Arun Jaitley said, “The insurance sector is investment starved. Several segments of insurance sector need expansion. The composite cap of the insurance sector is proposed to be increased to 49 per cent from the current level of 26 per cent with full management and control through the FIPB route.”
In 2009, the proposal to raise FDI limit in the insurance sector was first initiated but it met with a lot of opposition. It finally saw the light of day and brought relief to the insurance sector, especially the private players. The investment-starved Indian insurance industry cheered at this long-awaited move and voiced out their happiness.
However, this move did come with one rider. This additional investment has to follow the Foreign Investment Promotion Board (FIPB) route and will not follow the existing automatic route.
