India has proposed easing foreign investment rules for its insurance and aviation sectors as part of a push to help stimulate the economy, according to reports from Bloomberg.
Sources said the Finance Ministry has considered increasing the limit on foreign direct investment in insurance and pension companies from 49% to 74%.
The aim is to increase the amount of foreign direct investment to as much as 6% of gross domestic product, people familiar with the matter told Bloomberg, up from less than 2% currently.
The proposals would support Prime Minister Narendra Modi’s ambition to double the size of India’s economy to $5 trillion by 2025, which has come into question amid an economic slowdown.
World Bank data shows that foreign direct investment inflows into India increased by 15% to $26 billion during the six months ending September 2019.
However, the ratio to gross domestic product has progressively declined to 1.5% in 2018.
In August last year, the Indian government significantly lowered the required volume of Net Owned Funds (NOF) for foreign insurers and reinsurers looking to establish a branch in the Gandhinagar International Financial Services Center (IFSC).
It was hoped that the move would attract foreign insurance and reinsurance companies that operate in global financial centres to open a branch in the IFSC in India.
And last month, the Insurance Regulatory and Development Authority of India (Irdai) looked to further protect state assets against catastrophes with a proposal for a state-backed insurance scheme in certain states.