The contentious Insurance Bill

The amendment is expected to bring foreign investment to the tune of Rs 23,000 crore for the private sector

The much-debated Insurance Laws Amendment Bill (2014) seeks to raise the ceiling on Foreign Direct Investment (FDI) in insurance from the current limit of 26 per cent to 49 per cent. The firm will remain under the management and control of the Indian partner who will thus have the right to appoint the majority of directors, and control management and policy decisions.

Private sector insurance companies stand to gain immensely if this happens. The amendment is expected to bring foreign investment to the tune of Rs 23,000 crore and also attract more capital from current overseas partners. Presently, there are about 24 private sector insurance companies operating in the life and non-life segment in India.

This amendment can only be done through a Bill which has to be approved by both the Rajya Sabha and Lok Sabha. While it was expected to be cleared in the ongoing Winter session, this Bill—pegged to herald one of the first big economic reforms by the BJP government—has hit upon a hurdle, with the Opposition not ready to pass it. Parties like the Trinamool Congress and Shiv Sena are already hinting at ganging up against the Bill. Further delays are anticipated, particularly because the government is in a minority in the Rajya Sabha.

The Rajya Sabha Select Committee, appointed in August at the insistence of the Congress, has now asked for an extension till 12 December to further examine the Bill and perhaps buy time to placate the opposition. Once the committee presents its report, the Bill will have to be cleared by the Lok Sabha. Interestingly, the Amendment was essentially scripted by the UPA government in 2008 but met with stiff opposition from the NDA. The tables have clearly turned now.

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