India’s government and main opposition party publicly support it. Foreign investors and many local businesses are also in favor.
Yet a plan to raise the foreign ownership cap for Indian insurance companies from 26 percent to 49 percent — a jump not even implying a transfer of control — has prompted an exhausting struggle among politicians and business leaders that shows how hard it will be for Prime Minister Narendra Modi to enact his promised economic reforms.
Mr Modi’s ruling Bharatiya Janata party still hopes to push the Insurance Laws Amendment Bill through parliament this month in what would be the first significant legislative reform of the six-month-old government.
Among the beneficiaries that would be able to raise their stakes are the UK’s Standard Life , which wants to list its joint venture with HDFC, and Mitsui Sumitomo and Nippon Life of Japan, whose partners are Max India and Anil Ambani’s Reliance Group respectively. The law, the wording of which has yet to be finalized, is also expected to allow the entry of reinsurers and of Lloyd’s of London, the insurance market.
The bill was first presented to lawmakers six years ago by a Congress-led government. But it has been held hostage by political point-scoring over unrelated issues — first by the BJP in opposition and now by other parties in the upper house of parliament — and stalled by protectionists in the industry reluctant to share a promising new market with foreign investors.
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