The government is tweaking its foreign direct investment (FDI) policy to facilitate the proposed initial public offering (IPO) of state-run insurance behemoth LIC, after taking views from the finance ministry, department for the promotion of industry and internal trade (DPIIT) secretary Anurag Jain said on Thursday.
Speaking to reporters, Jain also said his department is giving “final touches” to the long-awaited e-commerce policy and the national retail trade policy. He, however, made it clear that FDI is allowed only in the marketplace model adding, “I do not see any change in view on that.”
“We are working on further simplification of the FDI policy. A very important point for further simplification is required urgently, as we have to do the LIC disinvestment. So, we would be coming out with a revised FDI policy which will facilitate LIC disinvestment,” he said.
Although the extant FDI policy allows up to 74% of foreign investment under the automatic route in insurance, it does not apply to LIC, which is administered through a separate law, the LIC Act.
According to Sebi rules, FPI and FDI are permitted under public offer. However, given that the LIC Act has no provision for foreign investments, there is a need to align various sets of relevant rules to allow foreign investor participation in the proposed IPO of the country’s largest insurer, analysts have said.
The DPIIT is in talks with the department of financial services (DFS) and the department of investment and public asset management (DIPAM) for this purpose. “We have had two rounds of discussions at my level and now, we have (DPIIT, DFS and DIPAM) come on the same page. So, we are in the process of drafting those changes in the FDI policy. We will go to the Cabinet (for approval),” Jain said.
The LIC IPO proposal was approved by the Cabinet in July 2021 and the government is planning to launch it in the current quarter.
Jain said the e-commerce policy “is finalised at my level and we have circulated that to other departments”. “Now we will have a higher-level discussion … We will have discussions with departments on that and then we will finalise it … A lot of work has been done,” he said.
Responding to a query on oxygen supply, given the latest surge in Covid-19 cases, Jain said the government is much better prepared this time and “we can meet the demand of up to 19,000 metric tonne”.
Oxygen demand in the country was about 9,000 tonne during the second wave, having risen from the peak requirement of over 3,000 tonne during the first wave.
Control room to help internal trade
Given the evolving Covid-19 situation, the DPIIT has set up a control room to “monitor the status and issues arising (if any) during transportation and delivery of goods and essential commodities due to restrictions (if any) imposed by various state governments/Union territories”. Trade and industry associations have been asked to inform of any difficulty they may face in manufacturing, transportation and distribution of goods or mobilisation of resources so that the DPIIT can take appropriate remedial measure.