Column : Does the FII route make sense?

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SummaryBy allowing FIIs to invest 23% instead of raising FDI cap to 49% compromises economic interests of all foreign insurers.

justifies a 26% for over 12 years after the insurance industry was opened up to the obvious and visible benefit of all Indians?

There are a number of other substantive reasons that militate strongly against this proposal. It seems to be driven by hasty political deal-making impulses without sufficient regard for unintended implications and consequences.

For these reasons MoF/GoI should stick to the original plan of increasing FDI in insurance from 26% to 49%. They should not, at this late hour—simply for political expedience which is not even necessary—complicate matters or muddy the waters by increasing foreign shareholding in insurance JVs via the FII route through a proposal that will do far more harm than good.

The author is chairman, Oxford International Associates Ltd

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