Union Cabinet approves up to 20% FDI in LIC of India under automatic route

A person familiar with the development said, “FDI up to 20 per cent is allowed in LIC under the automatic route.” FDI Policy Facilitate foreign investment in LIC and such other corporate bodies as the Government may require for disinvestment purposes. The FDI policy has been further simplified and enhanced, the person said. A spokesperson could not immediately be contacted for comment.

Presently, the FDI policy does not prescribe any specific provision for foreign investment in LIC which is a statutory corporation established under the LIC Act, 1956. This policy allows FDI in insurance companies and intermediaries or insurance intermediaries in the insurance sector. FDI ceiling The government approval route for public sector banks is 20%.

Since LIC does not fall under any of these categories and there is no limit prescribed for foreign investment in LIC under the LIC Act, the government has decided to allow foreign investment up to 20% for LIC and such other bodies corporate .

“In order to expedite the process of raising capital, such FDI has been put on the automatic route, as is the case with the rest of the insurance sector,” the person said.

The government is planning to take LIC to the markets next month by selling its 5% stake in the largest insurer through an IPO, which is likely to generate huge interest among foreign investors. The change in FDI policy for LIC will ensure that such investors do not face any hurdle in subscribing to the public offering.

The cabinet also approved other changes in the FDI policy aimed at improving the ease of doing business and in turn creating higher investment and employment in the country.

The person said, “With a view to improve and enhance the overall FDI policy, certain changes and alignments under various provisions of the FDI policy have also been made to provide greater clarity and an updated, consistent and easily understandable FDI framework. “

People said that the reforms would lead to ease of doing business and increase FDI inflows, and at the same time, ensure alignment with the overall intent or objective of the FDI policy.

“The increased FDI inflows will complement domestic capital, technology transfer, skill development for accelerated economic growth and development across sectors, to support the implementation of Atmanirbhar Bharat,” the person said.

The government aims to facilitate investment in India through policy reforms, which have so far led to record FDI inflows into the country. FDI inflows into India stood at US$ 45.15 billion in 2014-2015 and increased to US$ 81.97 billion during the financial year 2020-21, due to the COVID 19 pandemic, which is a 10% increase from US$ 74.39 billion in the previous financial year. Is. Year 2019-20.