Union Budget 2014: View on Foreign Direct Investment in Insurance by CEOs AEGON Religare and Aviva India

The Finance Minister in his budget has recognized the contribution that a growing insurance sector can make to the economy, particularly for long term investments in infrastructure.

K.S. GopalKrishnan, MD & CEO, AEGON Religare Life Insurance:

“Allowing FDI in insurance to go up to 49% is a welcome measure. This should help the insurance industry as a whole in terms of augmenting the capital inflows and also better practices from the foreign players.”

TR Ramachandran, CEO & MD, Aviva Life Insurance:

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“The Finance Minister in his budget has recognized the contribution that a growing insurance sector can make to the economy, particularly for long term investments in infrastructure. He has alluded to a multi pronged approach for encouraging insurance sector, rightly pointing out Quote “Benefits of insurance in India have not reached a large section of the people and insurance penetration and density are very low. The Government would work towards addressing this situation in multi-pronged manner with the support of all stake holders concerned.” Unquote.

We welcome the announcement of proposed increase in FDI cap in the Insurance sector from 26% to 49%. The inclusion of this aspect among the initial opening paras of FM speech indicates the strong intent of the government to pass the Insurance amendment bill which is welcome. This single announcement has potential to be a game changer as it can bring foreign exchange inflow of $10 – 15 billion as per Life Council estimates .

The industry, can now set its eyes on stepping up product offerings, distribution networks & technology to ensure superior customer experience. Higher amount of capital will provide the scope to the insurance companies to tap under-insured markets through better infrastructure and deeper distribution strategies.

Other positive announcements like increasing the basic income exemption limit and housing loan deduction by 50,000 each will leave more money in the hands of investor. 80 C investment cap increment to 1.5 Lakh expands room for insurance products further. These are positive developments for the economy and insurance industry”