India’s budget on 1 February proposed raising the foreign-ownership limit on insurers to 74%, from 49%.
This would enable overseas investors to hold majority stakes in Indian-based insurers for the first time.
Fitch Ratings says the move will “help the industry attract foreign capital, strengthen solvency and promote competition”.
“The proposals could encourage global insurers to enter the fast-expanding Indian market, while international insurers already holding minority stakes in domestic companies may try to increase their ownership over the medium term.”
The move is reminiscent of China’s decision in early 2020 to allow foreign companies to own 100% of domestic life insurers.
Going public
The Indian government also used the budget to reiterate its commitment to list the country’s largest state-owned insurer, Life Insurance Corporation of India, through an IPO in the financial year ending March 2022.
“We believe the listing will improve the insurer’s accountability and transparency, while attracting more foreign interest in the industry,” Fitch added.
