The insurance sector will not be guided by the methodology adopted under the new foreign direct investment norms.
The Insurance Regulatory and Development Authority (Irda) today said the insurance sector would be governed by the provisions of the relevant insurance laws and regulations as 26 per cent equity held by the foreign company is according to the regulations laid down in the Registration of Indian Insurance Companies, 2000.
Foreign partner in insurance companies is allowed to have a 26 per cent stake while majority remains with the domestic company.
“While concerns have been expressed in some quarters, it is clarified in case of Indian insurance companies, in view of the fact that the manner of calculation of 26 per cent equity capital held by a foreign company is laid down in clause 11 of the Irda Regulations, 2000, has excluded the insurance sector from the methodology,” said Irda Chairman J Harinarayan in a press note.
The Department of Industrial Policy and Promotion (DIPP), Union Ministry of Commerce & Industry have issued guidelines for the calculation of total foreign investment — direct and indirect foreign investment in Indian companies.
The new norms were laid down on February 11, 2009, which said that composite FDI would now include direct and indirect foreign investment and all investment by non-resident Indians would now be seen as FDI. All investment will be considered domestic if the entity, through which the fund is pumped in, is owned or controlled by a resident Indian.
