The Parliamentary Select Committee report on the Insurance Laws (Amendment) Bill is likely to be tabled in the Rajya Sabha on Wednesday. The panel is learnt to have agreed with the government on a 49% composite foreign investment cap (including FDI and other foreign investments including FII) in the insurance sector with full Indian management and control through the Foreign Investment Promotion Board (FIPB) route.
Next week, the government is likely to move the bill for Rajya Sabha’s consideration. Expressing satisfaction over the recommendations made by the Parliamentary panel, finance minister Arun Jaitley has said the insurance market expansion would take place once the Bill is passed by Parliament.
The report could feature dissent notes from CPI-M, Trinamool Congress, Samajwadi Party, and JD(U) — in Rajya Sabha on Wednesday. The four parties are against raising the FDI ceiling in the sector from the current 26%.
In the 245-member Rajya Sabha, those members backing the Bill are in a minority compared to those opposing it.
The Bill envisages, among other things 49% foreign investment (composite cap including FDI or FII or a combination of both) in the sector. As per the current norms, foreign investment by way of FDI, investment by FIIs/FPIs and NRIs up to 26% under automatic route is permitted in the sector.
The country’s insurance sector needs capital of around $12 billion up to 2020. Increasing the foreign investment cap to 49% is expected to lead to foreign investment of around $3 billion immediately, most of it in life insurance sector.