No proposal to modify FDI ceiling to accommodate LIC IPO, says govt

The Minister of State in the Ministry of Finance, Bhagwat Karad, while responding to the Lok Sabha question on changes in Foreign direct investments (FDI) policy for Life Insurance Company (LIC) initial public offering (IPO), stated that no proposal to modify the existing foreign investment ceiling in domestic insurance companies is under consideration.

Karad was responding to the queries of the Lok Sabha member Shanmuga Sundaram K.

Sundaram had asked, “whether the Government is having any proposal to amend the Foreign Direct Investment policy to accommodate LIC?”

“The Department of Promotion of Industry and Internal Trade has conveyed that a decision has been taken to amend the Foreign Direct Investment Policy to permit foreign direct investment (FDI) in the Life Insurance Corporation of India (LIC),” replied Karad.

When asked about whether the existing 74 per cent FDI ceiling in the insurance sector will be modified to 100 per cent for private insurance companies also, Karad replied, “No proposal to modify the existing foreign investment ceiling of 74 per cent in Indian insurance companies is under consideration of the Government as the same has been recently effected through amendments made to the Insurance Act, 1938 by the Insurance (Amendment) Act, 2021, on the basis of recommendations made by the insurance regulator after consultation with the industry.”

Sundaram also questioned the extent of the shortfall in achieving the disinvestment programme and the amount that is expected to be realised by 100 per cent FDI for LIC against the shortfall.

The minister, in response, said that “The Revised Estimate for disinvestment receipts for the FY21-22 is Rs 78,000 crore. Till March 9, 2022, Rs 12,423.67 crore has been received by way of disinvestment receipts. Further disinvestment receipts during the financial year are contingent on market conditions and investors’ interest.”

Karad, while answering the question on whether the proposed amendment will affect the existing policyholders, said that the “FDI Policy embodies the policy framework on FDI, subject to which a non-resident entity can invest in India in permitted sectors, and the amendments proposed thereto do not envisage any condition relating to policyholders.”