The current limit for FDI in the insurance sector is 49 percent.Mumbai: The Treasury Department announced changes to foreign exchange administration rules to raise the foreign direct investment (FDI) limit in the insurance sector to 74 percent.
The current limit for FDI in the insurance sector is 49 percent.
Under the Foreign Exchange Management (Non-Debt) Rules announced by the government on Thursday (second amendment), applications for FDI to private banks with a joint venture or subsidiary in the insurance sector can be submitted to the Reserve Bank of. India will consider in consultation with the Indian Insurance Regulatory Authority to ensure that the 74 percent foreign investment limit for the insurance sector is not exceeded.
In May, the government announced the change rules for Indian insurance companies (Foreign Investment) 2021, which make the appointment of an Indian resident citizen compulsory, at least one under the chairman, the managing director or the chief executive officer.
In the budget meeting earlier this year, Parliament approved the increase in the FDI limit in the insurance sector from the current 49 percent to 74 percent.
In order to be able to increase the FDI to 74 percent, companies would have to have at least 50 percent independent directors on the board. An exception applies when the chairperson is an independent director. In such a case, one third of the directors would be independent.
In addition, these companies would have to withhold net profits for dividend declarations if the prescribed solvency margins for a financial year were not met.
With low investment requirements, operational flexibility and the ability to develop appropriate indigenous technologies, small and medium-sized businesses have the power to take India to new heights, he said.
The government has allocated rupees 12,454 billion in reimbursements under the Duty and Tax Remission of Exported Products (RoDTEP) for the ongoing tax program, a senior official said.