EXCLUSIVE! Budget 2021 Expectations – FDI limit likely to go up in insurance from 49 pct to 74 pct; Anil Singhvi decodes impact

Budget 2021 Expectations – There could be a major announcement for the insurance sector in this this year’s Budget 2021. One of the major decisions in the budget could be an increase in the Foreign Direct Investment (FDI) limit from the existing 49 per cent to 74 per cent. Zee Business' Anurag Shah brings this EXCLUSIVE news emerging from the pre-budget meeting with the Finance Minister Nirmala Sitharaman.  

Shah told Managing Editor Anil Singhvi that there will likely be a major announcement in this regard by the FM in the Budget 2021. 

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Budget Announcement for Insurance Sector 

Citing his top sources in the Ministry of Finance, Shah said that the FDI limit could be raised from 49 per cent to 74 per cent. He went on to say that even the Insurance Regulatory and Development Authority of India (IRDAI) has corroborated that there is a lot of stress being given on increasing the FDI limit in the insurance sector in this year’s pre-budget meetings. 

Giving rationale, he said that the insurance sector in India was growing and it needs money. The government is mindful of this and may announce the increase in the budget. In a recently held meeting with the FM, the insurance companies and the General Insurance Council have urged the government to increase the limit. 

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ZEE BUSINESS BUDGET EXCLUSIVE

इंश्योरेंस सेक्टर के लिए बजट में बड़ी सौगात!

बजट में इंश्योरेंस FDI लिमिट 49% से बढ़कर 74% हो सकती ‌है, FM के साथ प्री-बजट मीटिंग में FDI लिमिट बढ़ाने की मांग- सूत्र#BudgetOnZee #ZBizExclusive #Insurance @AnilSinghvi_ @anuragshah_ pic.twitter.com/Mk1A0S4XtT

— Zee Business (@ZeeBusiness) January 11, 2021

Shah said that the confidence on this news comes because top sources in the Ministry of Finance and IRDAI have confirmed about the developments. This has been a discussion which has been ongoing over several years.  

The domestic promoters want to unlock the value of their investments and many want to make an exit, he further said. There are many companies which have been stuck at the upper limit of 49 per cent and investors want to invest in those companies.   

Hurdles 

Shah said that the biggest hurdle was the ownership hurdle and the government could bring some changes to ensure that the ownership and management control rested with the Indian companies despite a 74 per cent stake by the foreign companies. The government is trying to build a consensus on this. 

Anil Singhvi’s take 

The Market Gurus said that if the government takes this step it will be a big development for the sector and the insurance companies would see a rerating.