The limit of FDI in the insurance sector is 49%. This means that foreign investors can own up to 49% of the shares in an Indian insurance company. The remaining 51% of the shares must be held by Indian investors. This limit was set in 2000, and it has not been changed since then.
There are a few reasons why the government has imposed this limit on FDI in the insurance sector. First, the government wants to ensure that Indian investors have a controlling stake in the insurance sector. This is because the insurance sector is considered to be a strategic sector, and the government wants to ensure that it is not controlled by foreign interests.
Second, the government wants to protect Indian jobs in the insurance sector. If foreign investors were allowed to own more than 49% of the shares in Indian insurance companies, they could potentially lay off Indian employees and replace them with foreign workers.
Third, the government wants to ensure that Indian insurance companies are run in the best interests of Indian policyholders. If foreign investors were allowed to own more than 49% of the shares in Indian insurance companies, they could potentially make decisions that are not in the best interests of Indian policyholders.
Despite the government’s concerns, there are some who argue that the limit on FDI in the insurance sector should be raised. They argue that this would allow foreign investors to bring in more capital and expertise, which would benefit the Indian insurance sector. They also argue that the limit on FDI is outdated, and that it should be raised to reflect the current global economic environment.
The government has not yet announced any plans to raise the limit on FDI in the insurance sector. However, it is possible that the government may consider doing so in the future.