'FDI Insurance Rules Could Have Been Simpler'

He said under the amended insurance law the central government has been invested only with the additional power to make rules as regards the manner and control of "Indian Insurance Company" as redefined under the Ordinance.

"In my considered opinion, this is an instance of avoidable Executive excess or over-reach, the vires of which is suspect," he added.

Citing the banking sector where FDI is under automatic route up to 49 percent, a senior industry official preferring anonymity told. "Already we have to get the permission of insurance regulator for increasing capital. The government has now added one more bureaucratic layer in the form of FIPB permission."

As per the notification, any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by the Reserve Bank of India under the Foreign Exchange Management Act (FEMA).

According to Varadarajan, the reckoning of 49 percent foreign invest is a complex and compound proposition under the rules.

FDI includes investment by non-resident entities/persons resident outside India and other eligible entities in the equity shares of an Indian Insurance Company under the relevant FEMA Regulations, 2000, as per the notified rules.
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