New Delhi, March 21
The Association of British Insurers (ABI) has said that the Indian Government's proposal to hike the insurance foreign direct investment (FDI) cap from 26 per cent to 49 per cent is vital for the growth of the Indian insurance industry.
"Insurance is a capital intensive industry. Raising the FDI cap from 26 per cent to 49 per cent is vital for existing joint venture companies to raise more capital," Mr Stephen Haddrill, Director General, ABI, said at a press meet here today.
Incidentally, Mr Haddrill's visit to India comes soon after the Finance Minister, Mr P Chidambaram, had announced in the Union Budget 2006-07 that the Government would introduce a Bill in Parliament to amend various insurance laws. Subsequently, Mr Haddrill added that there was need for tax incentives for the pension market.
Earlier, speaking on the occasion, the Lord Mayor of the City of London, David Brewer, said that raising the cap would be a `huge incentive' for attracting greater foreign investments in the sector.
"In our meetings with Indian officials, we have been made to understand that the proposed hike is more of a commitment from the Indian Government. We are told that the amendments to the insurance laws should be through by the winter session of Parliament," the Lord Mayor said.
On the issue of the proposed shift-over to the EET (exempt-exempt-taxable) regime, Ms Sikha Sharma, Managing Director and Chief Executive Officers, ICICI Prudential Life Insurance, said the proposed move would be a dampener for long-term savings. "EET would be a dampener for long-term savings," Ms Sharma said.
Mr Joydeep Mukherji, Finance Director and Chief Investment Officer, Aviva Life Insurance agreed with Ms Sharma.
Mr Anthony Jacob, Managing Director, Royal Sundaram Alliance Insurance, said the proposed dismantling of non-life tariff by the IRDA beginning January 1, 2007, would be beneficial for the consumers of insurance products.