Govt to take up insurance brokerage FDI in March

The policy would make the FDI issue through a press note entry clear, two persons familiar to the development told FE. The department of economic affairs (DoEA) has referred the matter to department of industrial policy and promotion (DIPP) to make necessary amendments in the FDI policy.

The FDI policy is currently silent on the issue, but Reserve Bank of India (RBI) has so far not objected to such investment on the advise of Insurance Regulatory and Development Authority (Irda). The insurance regulator has allowed FDI upto 26% in broking and issued licences on the basis of insurance brokers regulations 2002. This regulation applies same principles for broking as is applicable for the insurance companies where provision for 26% FDI is available both in regulations and FDI policy.

“The move shall rationalise the long standing dichotomy between the treatment accorded to insurance companies and insurance intermediaries under the FDI policy. Insurance broking, falling under the latter category, has been categorised as ‘other’ financial services (outside the list of 18 permitted activities), thus, requiring prior FIPB approval irrespective of the extent of FDI,” said Akash Gupt, ED, tax and regulatory practise, PwC India.

Krishan Malhotra, head of tax and expert on FDI with corporate law firm Amarchand & Mangaldas said, “This issue is long pending with the government. It needs a

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