Corportae India welcomes lifting of cap on insurance FDI to 49%

Corporate India has widely welcomed the government's move to raise foreign direct investment ceiling in the insurance sector, with the general consensus that this will boost capital infusion in the cash-starved sector, enhance insurance cover, and push companies to provide long-term savings vehicles.

"We welcome the cabinet's approval to increase the FDI limit in insurance from 26 to 49 per cent with full Indian management and control, as it will help in attracting the much needed long-term capital in the sector, which can have multiplier effect on the economy, especially in meeting the huge infrastructure financing requirements," director-general of the Confederation of Indian Industry Chandrajit Banerjee said.

Prashant Sharma, chief investment officer of Max Life Insurance, said that foreign investors are looking to invest in insurance companies in India.

Sandeep Batra, executive director, ICICI Prudential Life Insurance, said that the insurance industry currently requires nearly Rs25,000 crore of capital – although he added that ICICI Prudential Life is adequately capitalised and doesn't need funds immediately.

Amitabh Chaudhry, managing director and chief executive of HDFC Life Insurance and also chairman of the insurance committee of corporate body FICCI, said the proposed raising of the FDI cap will drive capital infusion in the insurance sector and revive growth,

"Given that the (insurance) industry has witnessed muted growth in recent times, this move will further enable the industry to serve millions of under-insured Indians, improve life and health insurance coverage and provide long term savings vehicles," he said.