India Opens up Insurance Sector to Foreign Investors
India is allowing foreign investors increased access to the country’s insurance sector – a move that has been welcomed by the UK India Business Council (UKIBC) among others.
Parliament approved the Insurance Laws (Amendment) Act, which includes a key provision allowing foreign investors to increase their stakes in India’s local insurers from 26% to 49%.
The UKIBC said the decision is one of the first major foreign investment reforms the new business-friendly National Democratic Alliance (NDA) government has enacted and it expects the increased access to further enhance the industry’s ability to raise capital and support the sector’s growth.
“India’s foreign direct investment (FDI) cap in the sector had severely restricted insurers’ ability to raise capital,” said Richard Heald, UKIBC’s chief executive (CEO). “This long-awaited reform gives India access to crucial sources of foreign capital, which will support the strong growth seen in recent years, and allows additional expertise from leading financial centres such as the City of London.
“The UK is well placed to be India’s partner of choice in developing and modernising its Insurance sector. For instance last year the UK invested US$3.2bn in India, more than Japan (US$1.7bn) and the US (just under US$1bn) combined, which are ranked second and third FDI respectively. What’s more, the Square Mile still ranks as the leading financial centre in the world with the greatest concentration of financial expertise globally.”
The move also follows the 2014 launch of the UK-India Financial Partnership to strengthen links between the financial services industries of the two countries.