Boston, MA 08/15/2014 (wallstreetpr) – It seems that American International Group Inc (NYSE:AIG) has to wait for some more time to raise its stake in local venture in India. As of now, the higher cap is locked at 26%. The new-proposed bill calls for a higher cap of 49%.
The matter
India’s Prime Minister Narendra Modi proposed the bill to raise the cap of foreign insurers from the existing 26% to 49%. He intends to open up the $1.8 trillion economy. The bill is pending in the Parliament since 2008. With the new government, the insurers expected the rise in cap. However, the stiff opposition in the parliament indicates it is going to be tough for Modi led government.
The finance minister of India, Arun Jaitley said that the bill is sent to a 15-member select committee. The committee will review the bill and submit a report in upcoming sessions of parliament. It is a key decision for Indian government as the investors will closely watch the developments on the field. There are many other bills like pension, GST and others that will require parliamentary approval.
The significance of the bill
Many other domestic and international insurer companies are waiting for this bill. There is no clarity as to when the insurance bill will be passed in the parliament. Even if it passed what will be the limitations that it will come up with. It is an important bill for American International Group Inc (NYSE:AIG) and the other international insurers as it will pave the way for them in the second-most populous country.
Indian has got great scope in terms of insurance penetration. As of now, it stands below the global average of 6.5%. It is also a setback for Modi government as it needs the funds to fulfill its ambitious infrastructure goals. The changes can attract the foreign investors in the coming time.
