“Increase in FDI in the insurance sector to 74% a welcome move to provide a big boost to one of the major under-penetrated sectors,” said Chirag Nangia, Director Nangia Andersen. He move could help companies increase penetration and scale-up. Religare Insurance, Star Health, Future Generali Insurance, IDBI Federal Life, could see some shakeup after the change, according to Nangia.
So far the only India residents were allowed to own insurance sector firm. “Foreign companies will be allowed to own Insurance companies in India upto 74% for the first time. Till date, foreign Investment was restricted to 49% along with control and ownership in the hands of Indian partner. The change will require amendments to the IRDA, 1999,” said Nischal S Arora, Partner Nangia & Co.
Increase in FDI limits from 49% to 74 % for the insurance sector will help insurance companies to raise funds to ensure their solvency is maintained in line with growing business needs, according to Manoj Purohit, Partner and Leader – Financial Services Tax, BDO India. “This will also augment foreign inflows and help attract more foreign companies,” he added.
Credit: Financial Express