Shailaja Lall, Partner, Insurance & Reinsurance, Shardul Amarchand Mangaldas & Co, commented the budget has announced that there will be some simplification of the rules and regulations pertaining to FDI, which will be keenly awaited by foreign investors in the insurance sector
New Delhi: The government on Tuesday said it will bring out a financial sector vision and strategy document for five years, with the objective to meet the financial needs of the country.
“For meeting financing needs of the economy, our government will bring out a financial sector vision and strategy document to prepare the sector in terms of size, capacity and skills,” Finance Minister Nirmala Sitharaman said while unveiling Budget 2024-25 in the Lok Sabha.
This will set the agenda for the next 5 years and guide the work of the government, regulators, financial institutions and market participants, she added.
This will support the achievement of the country’s climate commitments and green transition, she added.
Sitharaman also announced that rules for Foreign Direct Investment (FDI) will be simplified to attract more funds into India.
On the question of FDI liberalisation, Sitharaman, during the post-Budget press conference, said, “We are trying to, since 2014, bring ease of doing business in India. The Centre raising the FDI in several sectors. It is a continuing policy to relax FDI norms.”
Sitharaman, during her budget speech, said, “The rules and regulations for Foreign Direct Investment and Overseas Investments will be simplified to (1) facilitate foreign direct investments, (2) nudge prioritization, and (3) promote opportunities for using Indian Rupee as a currency for overseas investments.”
Himanish Chaudhuri, Partner and Financial Services Industry Leader, Deloitte India, said,“The development of Financial Sector vision and strategy for the next five years will be eagerly awaited as the ecosystem participants will be able to have a clearer road map for overall growth as well for emerging areas like climate finance in line with the focus on sustainability. Implementation and continuous governance of these initiatives will be key to unlocking the budget impact.”
Shailaja Lall, Partner, Insurance & Reinsurance, Shardul Amarchand Mangaldas & Co, commented the budget has announced that there will be some simplification of the rules and regulations pertaining to FDI, which will be keenly awaited by foreign investors in the insurance sector.
In a significant move, the union Budget has reiterated the GST Council’s views that the activity of apportionment of co-insurance premiums by the lead insurer to the co-insurers in the co-insurance agreement and the services by insurers to reinsurers in respect of ceding/re-insurance commission will, subject to certain conditions, be treated neither as a supply of goods nor as a supply of services.
This issue was the bone of contention between GST authorities and insurers for the past few years and is a welcome clarification for the insurance sector, as the heavy burden of potential GST payments for such arrangements will now be lifted.