Debating India

FDI in insurance to go up to 49 %

Wednesday 6 April 2005

By Our Special Correspondent

NEW DELHI, APRIL 5. The United Progressive Alliance Government plans to increase the foreign direct investment cap in the insurance sector from the current 26 per cent to 49 per cent. It also plans to work out a policy to permit foreign investment in retail trade, the Finance Minister, P. Chidambaram, said here on Tuesday.

Mr. Chidambaram, who wrapped up the 15th Indo-German joint commission meeting here, said there were opportunities for German companies to enter India’s insurance sector even at this stage.

Germany wanted India to further ease the insurance sector norms and extended cooperation in the pension, social security and micro-finance sectors.

FDI in retail trade

On FDI in retail trade, Mr. Chidambaram said: "Cash-and-carry is allowed now. We have to work out a policy on FDI in retail. One of Germany’s leading retail chains, `Metro’, is operating in Bangalore and is on the verge of expanding to two more areas."

On banking, he said, "We are under [the] WTO regime. Foreign banks have been allowed to operate as either branches or subsidiaries or acquisitions."

The Reserve Bank of India had laid down the road map that enables foreign banks to acquire up to 74 per cent stake in private banks.

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