In the Union Budget for 2004-05, the then finance minister P Chidambaram had announced a plan to increase FDI in insurance to 49%.
Following the enactment of Insurance Regulatory and Development Authority Act, 1999, India’s insurance sector was opened up to private players and FDI up to 26 % was allowed in 2000. Almost 15 years after that, Parliament on Thursday cleared the Insurance Laws (Amendment) Bill, 2015, that, among other things, raised the FDI limit from 26 per cent to 49 per cent. This comes after successive governments tried to raise the FDI ceiling but failed to get it cleared by both Houses in Parliament.
The Lok Sabha had cleared the Bill last week and on Thursday the Rajya Sabha, too, followed suit.
Key developments over the last 15 years:
2004: In the Union Budget for 2004-05, the then finance minister P Chidambaram announces a plan to increase FDI in insurance to 49%
2005: KP Narasimhan committee suggests amendments to insurance laws
Dec 2008: UPA government introduces the Insurance Laws (Amendment) Bill, 2008 in Rajya Sabha to raise FDI cap to 49 %. The Bill is referred to the Standing Committee on Finance
Sept 2009: After general elections, the Bill is once again referred to the Standing Committee, which was re-constituted
Dec 2011: Standing Committee led by former finance minister Yashwant Sinha submits report recommending that FDI limit in insurance should not be raised
July: NDA government circulates fresh amendments to the Bill calling for composite foreign investment cap of up to 49 %
August: The Bill is sent to the Select Committee of the Rajya Sabha for a re-look. The panel is expected to submit its report within the first week of the Winter Session. Finance minister Arun Jaitley says he is hopeful of its passage in Winter Session
November: Report of the Select Committee looks set to be delayed after two of its members, BJP MPs Mukhtar Abbas Naqvi and J P Nadda, are sworn into the Council of Ministers
December 24: The Union Cabinet approved the ordinance to push reforms in the Insurance sector as the Bill could not be taken up in the Rajya Sabha since a united opposition held up proceedings for much of the month-long session.
The President signed the ordinance that paved the way for raising the FDI limit in Insurance sector.