Chennai: Insurance players exuded positive sentiments with the Union budget proposal to raise foreign direct investment (FDI) cap of the sector on the hopes of increased capital inflows.
Union finance minister Arun Jaitley, while presenting the Budget for 2014-15, on Thursday proposed to increase the composite cap of the insurance sector to 49 per cent from the current level of 26 per cent with full management and control through the FIPB route.
Insurance sector is estimated to gain about Rs 7,800 crore as FDI with this decision to hike the cap.
“Allowing FDI in insurance to go up to 49% is a welcome measure. This should help the insurance industry as a whole in terms of augmenting the capital inflows and also better practices from the foreign players,” said K.S. Gopalakrishnan, MD & CEO, AEGON Religare Life Insurance on FDI in Insurance.
Terming the announcements to be more on the predicted lines, Sandeep Ghosh, MD & CEO of Bharti AXA Life Insurance, said, “We welcome the move to increase the composite FDI in insurance to 49%. It is a significant step in the right direction. However, we need to wait for the Insurance Bill to be presented and passed in the parliament for this to become a reality and yield the expected results.”
Mr Jaitley also announced a move to increase the 80C investment cap to Rs 1.5 lakhs from the current Rs 1 lakhs which the industry feels would encourage people to invest in long term savings instruments like life insurance.
“While we would have to wait to a see the limit for life insurance, we are sure this will help the retail customers who will benefit from the enhanced tax benefit on savings products, including life insurance,” said Mr Tarun Chugh of PNB Metlife.
