India to Further Liberalize Insurance and Aviation Sectors?

According to sources, India is mulling over the decision to further liberalize the insurance and aviation sectors to foreign investors with the aim of stimulating the economy.

Economic Times reported that the Finance Ministry is deliberating on increasing the foreign direct investment or FDI limit in insurance and pension companies to 74 per cent from the current 49 per cent. Apart from this the ministry is also suggested to permit foreign airlines to own Indian carriers. ET sources asked not to be identified given the plan is not yet public.

The sources also revealed that the Finance Ministry is planning on allowing 100 per cent foreign direct investment in railway operations, education, and rental housing management companies. As per current FDI policies, foreign equity investment is prohibited in railway operations.

The government wants to increase the amount of FDI to as much as 6% of gross domestic product, the people said, compared with less than 2% now.

Last year, the Modi government had introduced several reforms in the foreign direct investment policies across different sectors like digital media, single brand retail trade, contract manufacturing, and coal mining. The start of 2020 also hints at new changes and norms about to come. Time will tell if the changes truly increase foreign direct investment equity inflows into the country.

Prime Minister aims at doubling up the size of the economy to $5 trillion by the year 2025.