New insurance FDI plan to end oppn
As per a fresh plan prepared by the finance ministry, the government plans to propose keeping the FDI cap in the insurance sector at 26% and allowing another 23% as foreign institutional investment (FII). Key members of the standing committee on finance from the Opposition have indicated their willingness to consider this proposal, which could also speed up listing of insurance companies on the exchanges.
This compromise formula is being prepared as the UPA government is bound to face stiff opposition to an earlier plan to raise the FDI cap insurance to 49% from 26%. The standing committee on finance had opposed any increase in FDI limits in the insurance sector.
Sources said the new proposal has the approval of finance minister P Chidambaram, and the government is trying to securing opposition parties' concurrence on it.
Bhartruhari Mahtab, Biju Janata Dal MP and a member of the standing committee on finance, told FE on Sunday: “We have given our report to maintain the FDI cap at 26% in the insurance sector, and not raise it to 49%.” When asked about the new proposal being prepared by the government, he said: “Let the suggestion come to us (the standing committee), then we will take a call. Personally, I think it will be premature to react right now."
FE could not reach
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