Union Parliamentary Affairs Minister, Venkaiah Naidu, on Sunday, said that insurance was one sector which required maximum investment as the insurance bill is likely to be tabled in Parliament tomorrow.
The union government is proposing to raise the foreign direct investment cap in the insurance sector to 49 percent from existing 26 percent. This bill is touted as a potential lifeline for a sector starved of capital and squeezed by regulations.
The previous UPA government's approval for a proposal to raise the limit to 49 percent has been kept pending for a long time due to opposition by politicians, frustrating many overseas investors lured by low penetration rates in India.
Naidu said the delay in passage of the bill is the reason why it has not been possible to mobilize required capital levels.
"Insurance is one sector which needs maximum investment. Despite 26 percent foreign investment that is allowed under the existing insurance sector, the desired penetration has not taken place, and the domestic companies could not mobilise required capital levels," said Naidu.
The proposal, which requires the approval of both houses of Parliament, would bring foreign investment worth up to USD 2 billion into the sector within a year of its implementation, industry officials estimated.
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Therefore government is proposing 49 percent Foreign Direct Investment in the insurance sector," added Naidu.
Finance Minister Arun Jaitley had said in his budget speech that the "composite cap" in the insurance sector should be increased to 49 per cent from the current level of 26 per cent, with full Indian management and control.