"What I have, reflects the policy of the government and a party would support the government. This issue has to go to Parliament. I have said that we prefer 49 per cent cap," he said in an interview to PTI.
Currently foreign direct investment (FDI) is allowed up to 26 per cent in the private insurance companies.
On when the proposal, which has been pending since 2008 in the Rajya Sabha, would be taken up by Parliament, Jaitley remained non-committal but said it would be taken up soon.
In his budget speech, Jaitley had said that the insurance sector is investment starved and there is a need to increase the composite cap in the sector to 49 per cent, with full Indian management and control, through the FIPB route.
BJP has been opposing the increase in the foreign investment cap in the insurance sector.
Welcoming Jaitley's decision on insurance sector Congress party has indicated that it will support the bill.
"We, unlike NDA, do not change stance when we are in government and (when we are in opposition). We will stand by (it) ... provided every clause in it (Bill) is for the benefit of the common man," party leader Jyotiraditya Scindia had said when asked whether the Congress will support the Bill in Parliament.
The proposal to raise FDI cap has been pending since 2008 when the previous UPA government came up with Insurance Laws (Amendment) Bill to hike foreign holding in insurance joint ventures.
However, the Bill could not be taken up in the Rajtya Sabha because of opposition from several political parties, including BJP.