Prime Minister Manmohan Singh has said his government intended to raise the cap on foreign direct investment (FDI) in the insurance sector to 49% and allow "greater role" to foreign banks. In an interview to German newspaper 'Die Handelsblatt' yesterday, noting that foreign insurance companies are now permitted to hold a share of 26% in India, the Prime Minister said: "we intend to increase this to 49%." This would require consensus in the ruling coalition, "and this is presently not in sight." The Prime Minister also said: "We will enable a greater role of foreign banks, step by step." The Prime Minister acknowledged that the Left parties, extending support to the ruling UPA, "limit" his government's options in the short term and it takes "a lot of time to convince our coalition partners".Over the long term, liberalisation of the banking and insurance systems will continue, Singh said. On allowing foreign investment in the retail sector, the Prime Minister said the government had "begun a cautious opening" in this area. "We will learn from this experience... There is something such as the fear of the unknown. But with time, we should be able to enable greater presence of foreign firms in this sector as well."
