'FDI Insurance Rules Could Have Been Simpler'

CHENNAI: The Indian government seems to have overstepped its boundary on extending foreign direct investment (FDI) limits for insurance intermediaries, industry experts say.

Welcoming the notification of rules relating to FDI in the insurance sector by the central government Friday, officials feel the approval process could have been simplified a bit.

As per the notified rules, FDI in insurance sector will be under automatic route up to 26 percent and anything above that limit up to 49 percent would be with the permission of the foreign investment promotion board (FIPB).

The rules also stipulate that FDI cap of 49 percent applicable to insurers would also be applicable to intermediaries like insurance brokers, third party administrators, surveyors and loss assessors and others.

Referring to the extension of FDI limits to intermediaries Supreme Court advocate and an expert in insurance/company/completion laws D. Varadarajan told IANS: "The Executive seems to have overstepped the rule making power provided under section 114 of the Insurance Act as amended by the Insurance Ordinance, 2014."
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