(MENAFN- IANS) By Venkatachari JagannathanChennai, Jan 28 (IANS) Strangely not much of noise is being heard from the Indian insurance sector on hiking the foreign direct investment (FDI) to 100 per cent from the current 74 per cent as their budget wishlist.
In the past, the sector's top executives would make a high-decibel pitch for their demand to increase the FDI limit.
Earlier, the life insurance industry had advocated that the increase in FDI from 26 per cent to 74 per cent would bring in an additional capital of Rs 50,000 crore.
Incidentally, not many foreign partners of Indian insurance joint ventures have increased their stakes to the permissible 74 per cent and the touted amount has not materialised.
'Among the host of expectations from the budget, the proposal to increase the FDI limit to 100 per cent in insurance is unlikely be introduced in the upcoming Budget, especially since the FDI limit has just been recently increased to 74 per cent,' Anup Rau, MD and CEO, Future Generali India Insurance on the pre-budget expectations said.
He said the industry should nevertheless have this conversation with the policy makers on allowing 100 per cent FDI. According to him, one of the challenges for the global insurers is to find a suitable local partner.
'With over 60 insurers between life and general insurance and a large number of them joint ventures, there is really an acute shortage of local partners, who either have the ability or the inclination to get into this space,' Rau said.
'In my view, this is not even a demand for the sector participants. The sector currently dominated by the domestic majority players, why would they want 100 per cent FDI,' Avinash Singh, Senior Research Analyst, Emkay Global Financial Services, told IANS.
Singh noted: 'And practically speaking, even 74 per cent has been a non-starter, largely. The ones where any foreign investor would be interested in owning majority are not available as the domestic promoter wouldn't exit or go in minority.'
He added: 'Even the valuation of these entities are demanding. And where FDI of above 50 per cent is welcome are the struggling names where no foreign investor would be interested.'
(Venkatachari Jagannathan can be reached at )
--IANS
vj/svn/