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DPIIT to come out with revised FDI policy to facilitate LIC disinvestment: Secy.
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According to the current FDI policy, 74% foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to LIC, which is administered through a separate LIC Act The commerce and industry ministry is making changes in the foreign direct investment (FDI) policy to facilitate disinvestment of the country’s largest insurer LIC, after taking views from the finance ministry, a top government official said on Thursday.
Anurag Jain, secretary in the Department for Promotion of Industry and Internal Trade (DPIIT), said the current policy related to the sector will not facilitate the disinvestment process of LIC and, hence, needs to be revised.
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“We are working on further simplification of the FDI policy. A very important point for further simplification is required urgently as we have to do the LIC disinvestment. So, we would be coming out with a revised FDI policy which will facilitate LIC disinvestment,” he told reporters here.
The matter is being discussed with the Department of Financial Services and Department of Investment and Public Asset Management (DIPAM).
“We have had two rounds of discussions at my level and now, we have (DPIIT, DFS and DIPAM) come on the same page. So, we are in the process of drafting those changes in the FDI policy. We will go to the Cabinet (for approval), ” he said.
According to the current FDI policy, 74% foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to the Life Insurance Corporation of India (LIC), which is administered through a separate LIC Act.
As per Sebi rules, both FPI and FDI are permitted under public offer. However, sources said that since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation.
The Cabinet had in July last year approved the initial public offering (IPO) of LIC and the stake sale is being planned in the current March quarter.
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