The Foreign Investment Promotion Board cleared 19 FDI proposals including that of Walt Disney Company and Reckitt Benckiser (India) entailing total investments of Rs 2,326.72 crore. However, it rejected the proposal of Multi- Commodity Exchange of India for a post-facto approval of foreign investment made by Alexandra Mauritius Ltd prior to the period when FDI in commodity exchanges was brought under approval route.
The Foreign Investment Promotion Board cleared 19 FDI proposals including that of Walt Disney Company and Reckitt Benckiser (India) entailing total investments of Rs 2,326.72 crore. However, it rejected the proposal of Multi- Commodity Exchange of India for a post-facto approval of foreign investment made by Alexandra Mauritius Ltd prior to the period when FDI in commodity exchanges was brought under approval route.

Potential investment in the sector could be anywhere in the range of Rs 80,000 crore to 1,00,000 crore. This may be just be the cure for  pushing the country into the league of top tier markets, beyond the 12-year old ’emerging markets’ category” Anuraag Sunder PwC India

New Delhi : Welcoming the Cabinet approval to raise FDI ceiling in insurance, India Inc said the move will drive capital infusion in the cash-starved sector by attracting investments from foreign players, enhance insurance cover and push firms to provide long-term savings vehicles.

The Cabinet on Thursday approved 49 per cent foreign investment in insurance companies through the FIPB (Foreign Investment Promotion Board) route ensuring management control in the hands of Indian promoters.

This is the first major reform initiative by the Narendra Modi-led NDA government, and has raised expectations of further relaxation of FDI norms in sectors like defence and railways.

 “The CCEA has approved raising of FDI cap in insurance sector to 49 per cent from 26 per cent,” sources told PTI, adding that all investment proposals beyond 26 per cent will have to be approved by the FIPB and Indian promoters will continue to have the control of the management. With the Cabinet approving the amendments to the long pending Insurance Laws (Amendment) Bill, it will now be taken up by Parliament.

Consultancy firm PwC said the move would see up to Rs 1 lakh crore in potential investment into the sector and take the country into the top league. Another consultancy firm Deloitte sees the move triggering selective consolidation since players with a strong capital base may have access to a war chest to acquire weaker players.       “It is heartening to see the new Insurance Bill being cleared by the Cabinet today. While one will await its passage by Parliament, there are other important provisions in the Bill over and above the capital structure that will benefit companies and therefore customers,” ICICI Lombard General Insurance Managing Director and Chief Executive Bhargav Dasgupta told PTI.

Shares of companies that run insurance business rose by as much as 4 per cent after the Cabinet gave the go-ahead to FDI cap hike in the sector to 49 per cent with a rider that management control will remain in the hands of Indian promoters.

Reliance Capital shares went up by 4.05 per cent, while Max India gained 0.91 per cent on the BSE. Similarly, shares of Aditya Birla Nuvo rose by 0.56 per cent.

“This move should bring in the much required long-term capital for the sector. It will also bring in domain capital which is of critical importance in this phase of growth of life insurance industry,” Max Life Insurance CEO & MD Rajesh Sud said.

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