This move could be made in the hopes that it will give the country’s economy a boost.
Manmohan Singh, the Prime Minister of India, is making insurance news around the world, in his latest efforts to create the largest opening in the Indian economy has seen in ten years, as the cabinet considers proposals for lifting the foreign investment caps for insurers as well as in the pension industry.
The country’s ministers will be considering a large new opportunity for overseas insurers.
Should the measure pass, it would make tremendous international insurance news, as insurers from outside India would be allowed to own as much as 49 percent of its local coverage ventures. This would be a massive spike from the current cap at 26 percent. It would also represent the first time that direct foreign investments would be allowed, up to 26 percent.
Before this news is made by becoming a law, the parliament will need to give its approval.
As the current government in India is a minority, this positive insurance news isn’t at all a sure thing. In fact, it could prove rather difficult to pass the law in the current political environment. Following two years where there was very little movement at all in policy, the government, which is led by the Congress party, suddenly began making decisions last month that could work to open up the aviation and retail sectors, as well as the energy marketplace, and now foreign investments and fuel subsidy reductions.
Although these moves did not require lawmaker support, it shattered the largest ally that Singh had in the ruling coalition. The prime minister continues to defend the choices that he made, stating that the only way to help the millions of poor in the country would be through programs that would be paid for by a strong economy, which would not have been available without those changes.
A parliamentary panel recommendation has been rejected by Singh’s administration. Last December, the panel made insurance news by saying that any more increases to the direct investments from foreign firms would not be in the industry’s best interest within the company.