This enhanced limit will be available to those companies which invest their entire premium in India, said Pankaj Chaudhary, minister of state, Ministry of Finance in the Lok Sabha.
New Delhi: By raising foreign direct investment(FDI) in the Indian insurance sector from 74 per cent to 100 per cent, the government aims to unlock the full potential of the sector that is expected to grow at 7.1 per cent annually over the next five years outpacing global and emerging market growth, the government has said.
Raising limit of FDI in the insurance sector to 100 per cent will help in attracting stable and sustainable investment and facilitate technology transfer and improve insurance penetration across the country, said Pankaj Chaudhary, minister of state, Ministry of Finance while answering MP Kalanidhi Veeraswamy’s questions in the Lok Sabha.
This enhanced limit will be available to those companies which invest their entire premium in India, he added.
Also, increased FDI will complement domestic initiatives and drive inclusive growth. This will increase the number of insurers in the country resulting in greater competition which in turn would lead to a more structured and balanced approach to premium pricing., said the minister.
The IRDAI is the sector regulator established under the IRDAI Act to protect the interests of policyholders of the insurance policies and to regulate , promote and ensure orderly growth of the insurance industry..
Veeraswamy had raised questions in the House whether the move by the government to allow 100 per cent FDI in the insurance sector can safeguard the interests of consumers and ensure foreign investors do not dominate the sector and it will not reduce market completion or put domestic insurance companies at a disadvantage particularly smaller Indian owned players.
Veeraswamy also wanted to know what measures the government is taking to prevent undue foreign influence on the insurance policy formulation and the manner country’s interests remain at the forefront of the sector’s development and also the steps being taken to ensure that the increased foreign investment don’t lead to rise in premiums or reduced accessibility of insurance products for the common people particularly in rural and underserved areas.