Mega boost! Govt to increase FDI from 49% to 74% in insurance: Budget 2021
Finance Minister Nirmala Sitharaman today has proposed to amend Insurance Act, 1938 to increase FDI limit from 49% to 74% in insurance companies during Union Budget 2021. She further announced to allow foreign ownership and control with safeguards in the insurance industry.
Sharing his opinion on the move, Manoj Purohit, Partner and Leader – Financial Services Tax, BDO India, “To ease access of finance and augment funds for the infra sector, the proposal of providing FPIs an entry into debt financing of REITs and InvITs will open up a large source of fresh funding for the infrastructure and real estate sectors. This will also open up a new avenue for FPIs to invest in a growing market like India."
“Increase in FDI limits from 49% to 74 % for the insurance sector is a welcome step and will help insurance companies to raise funds to ensure their solvency is maintained in line with growing business needs. This will also augment foreign inflows and help attract more foreign companies," he added.
Nirmala Sitharaman today has proposed a sharp rise in capital expenditure for the next fiscal to ₹5.54 lakh crore, from ₹4.39 lakh crore in the current financial year.
The central government aimed to garner ₹1.75 lakh crore through divestments in 2021-22, according to Union Budget documents. In FY21, the government had budgeted to raise ₹2.1 lakh crore through divestments but fell short.
