The bill to raise the foreign direct investment (FDI) cap in insurance sector to 49 per cent may be introduced in the ongoing session of Parliament.
“We are trying to bring the bill in the current session itself. There is a need to enhance capital base of the sector,” an official source said a day after Finance Minister Arun Jaitley Budget made an announcement of capital infusion in the resource-starved sector.
Capital infusion in insurance is important for generation of long-term fund for infrastructure development, he said.
The FDI in insurance sector is capped at 26 per cent at present.
Finance Minister Arun Jaitley while presenting the Budget in Parliament on Thursday had said that the government will soon bring the insurance bill in Parliament.
The finance minister had also proposed to raise the composite FDI cap in the insurance sector.
The composite cap refers to clubbing of foreign investment by strategic and portfolio investors.
The Insurance Laws (Amendment) Bill has been pending in Parliament since 2008.
While the BJP extended its support to the previous UPA regime in the passage of the Pension Fund Regulatory Authority Bill last year, it categorically rejected the insurance cap being raised to 49 per cent.
According to the Economic Survey for 2013-14, the insurance penetration has grown from 2.3 per cent (life 1.8 percent and non-life 0.7 per cent) in 2000 to 3.96 per cent (life 3.17 per cent and non-life 0.78 per cent) in 2012.
Insurance penetration is defined as the ratio of premium underwritten in a given year to the gross domestic product (GDP).
Insurance density is defined as the ratio of premium underwritten in a given year to the total population.