Decks cleared for Insurance bill, if Parliament is not disrupted

Congress and BJP agree on raising foreign direct investment cap to 49%

With the Congress and the Bharatiya Janata Party on the same page in the Rajya Sabhas select committee on changes in Indias insurance laws, prospects of the Insurance Laws (Amendment) Bill being tabled in Parliament have turned brighter.

Currently, the select committee is considering the Bill.

It is understood to have favoured raising the existing 26 per cent cap on foreign direct investment in the sector to 49 per cent (including for portfolio investors).

The fear of hot money or funds by foreign institutional investors taking over the sensitive insurance sector had first been voiced by the BJP (under the leadership of former finance minister Yashwant Sinha, the party had opposed raising the FDI caps altogether).

Subsequently, the Congress had also voiced concern.

In August, Anand Sharma, Congress MP in the Rajya Sabha, had said, FDI means its tangible investment, solid investment coming into a particular sector for business purposes and when there is a sectoral cap, the issue of ownership and control comes in, which means even if you go up to 49 per cent, the ownership and control is very clearly defined.

Earlier, there were two definitions.

Now, too, one is for companies, and the other is under FDI so that there is clarity on what we mean by Indian ownership and control.

The change that has happened is the BJP has proposed portfolio investment as part of FDI. This is a sensitive sector.

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Decks cleared for Insurance bill, if Parliament is not disrupted