Source by: Business Standard
These safeguards include requirements such as a majority of board members being resident Indians and higher solvency requirements for foreign-invested insurers domiciled outside India
While India has announced raising the cap on foreign direct investment (FDI) in insurance from 74 per cent to 100 per cent, it remains unclear whether certain safeguards for domestic firms introduced in 2021 will be removed, says a report by the Office of the United States Trade Representative (USTR).
These safeguards include requirements such as resident Indians comprising a majority of the members of a board, and higher solvency for insurers domiciled outside India.
According to reports, the government is reviewing and simplifying rules to increase the foreign direct investment (FDI) limit in the insurance sector to 100 per cent.
Meanwhile, the report has highlighted that India maintains an uneven playing field in insurance. The 2024 report by the Office of the United States Trade Representative (USTR) had raised the same concerns.
“State-owned companies are not subject to the same law and prudential supervision as private firms and enjoy various guarantees from the government. Currently, the Indian Government maintains an explicit sovereign guarantee on every Life Insurance Corporation (LIC) policy. As a result, many customers choose to buy LIC policies over those offered by private insurers, giving LIC an unfair competitive advantage,” the report said.