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Mumbai, New Delhi, Oct 31 : Domestic insurers have cheered the move of the Union cabinet clearing the proposal to increase foreign direct investment (FDI) from 26 to 49% in the insurance sector.
"The Indian insurance industry has been awaiting this news for a while. The hike in FDI will surely inject adrenalin into the country's insurance industry," said Ajay Bimbhet, managing director, Royal Sundaram general Insurance.
TR Ramachandran, designate - MD & CEO, Aviva India, said, "We welcome this announcement and are delighted that the increase in FDI to 49% has been approved by the cabinet and we look forward to the bill being approved soon. A simple calculation shows that raising FDI limit to 49% may increase the total FDI in the life insurance industry by almost 2.5 times from the current levels of approximately Rs 2,500 crore. It offers flexibility in capital flows that in turn helps to accelerate long-term growth of the high-growth, high-potential life insurance industry in India. The promoters, Bharti and AXA, will take a decision on the shareholding once the provision is passed in the Parliament, said Nitin Chopra, CEO, Bharti AXA Life Insurance Company.
The shares of companies with a presence in the insurance sector surged on the bourses on Friday, as investor sentiment received a boost following the cabinet approval.
The Left parties, on Friday, accused the UPA government of working to demolish the economy's strong fundamentals through acts like these.
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