Cabinet clears 49% FDI in insurance; opens up pension funds

The union cabinet at its meeting today approved raising foreign investment limit in insurance business to 49 per cent from the existing 26 per cent and approved 26 per cent foreign participation in pension funds, boosting hopes of foreign investors looking for opportunities in India.

The cabinet also cleared the revised draft of the Companies Bill, 2011, as the UPA government pushed ahead with more policy changes that would facilitate foreign investments in the country.

These, however, will have to be passed by Parliament before becoming law.

This is the second round of policy changes in recent times aimed at boosting FDI flows into the country since 13 September when the government announced the controversial decision to allow 51 per cent FDI in multi-brand retail trading, besides relaxing FDI norms for civil aviation and broadcasting services.

The latest rounds of policy changes are expected to face stiff resistance from opposition parties and even allies of the ruling United Progressive Alliance (UPA).

The Left parties as well as the Mamata Banerjee-led Trinamool Congress, a former ally of the Congress in the UPA, are opposed to FDI in both insurance business and pension funds.