The Government of India is calling out for changes in the foreign direct investment (FDI) policy to sanction the disinvestment of the Life Insurance Corporation of India (LIC). The decision came after consultations with the finance ministry. The e-commerce policy is at the last stages of finalisation according to a top government official.
The current policy related to the sector will not facilitate the disinvestment process of LIC and, hence, needs to be revised, stated Anurag Jain, secretary in the Department for Promotion of Industry and Internal Trade (DPIIT).
“We are working on further simplification of the FDI policy. A very important point for further simplification is required urgently as we have to do the LIC disinvestment. So, we would be coming out with a revised FDI policy which will facilitate LIC disinvestment,”
“We have had two rounds of discussions at my level and now, we have (DPIIT, DFS and DIPAM) come on the same page. So, we are in the process of drafting those changes in the FDI policy. We will go to the Cabinet (for approval), ” he said
According to the current FDI policy, 74 per cent of foreign investment is accorded under the automatic route in the insurance sector. Nevertheless, these rules do not apply to the Life Insurance Corporation of India (LIC), which is administered through a separate LIC Act. The Government has already approved the continuation of SIP, for a further duration of five years (FY 2021- 22 to 2025-26) with a financial outlay of Rs. 9.70 billion, vide Notification dated 29 November 2021.
Foreign Direct Investments (FDI) can be made under two routes—Automatic Route and Government Route. Under the Automatic Route, the foreign investor or the Indian company does not require any approval from RBI or the Government of India for the investment. FDI Policy is formulated by the Government of India.