Following the landslide victory of Prime Minister Narendra Modi’s BJP party in the recent Indian general elections, the party has proposed opening up the insurance and aviation sectors, allowing more foreign investment.
The proposal, which was unveiled by Finance Minister Nirmala Sitharaman during the annual budget presentation in Parliament, attempts to counteract weakening growth in the aforementioned sectors, a report by Reuters said.
“The government will examine suggestions of further opening up FDI (foreign direct investment) in the aviation, media, and insurance sectors in consultations with stakeholders,” Sitharaman was quoted as saying in the report.
She added that 100% foreign ownership will be permitted for insurance intermediaries. Currently, foreign entities can only own a maximum of 49% in insurance companies. Foreign participation in the Indian insurance industry, which is worth billions of dollars, has been tightly guarded by the government out of fear of backlash from the strong workers unions.
“It is high time India gets fully integrated into the global value chain of production of goods and services but also becomes part of the global financial system to mobilise global savings mostly institutional in insurance, pension, and sovereign wealth funds,” said Sitharaman.
