India’s union cabinet has approved amendments to allow foreign direct investment (FDI) in government-backed Life Insurance Corporation of India (LIC), media reports said.

The move clears the way for up to 20% FDI in LIC, which is set to launch an initial public offering (IPO) soon, through the automatic route.

Go deeper with GlobalData

Premium Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

“Since, as per the present FDI policy, the FDI ceiling for public sector banks is 20% on government approval route, it has been decided to allow foreign investment up to 20% for LIC and such other bodies corporate. Further, in order to expedite the capital raising process, such FDI has been kept on the automatic route, as is in the case of rest of the insurance sector,” Business Standard reported citing government sources.

Currently, FDI is not allowed in the LIC, which is governed by special acts, whereas a 74% FDI is allowed in other private players in the insurance space.

According to the Department for Promotion of Industry and Internal Trade’s (DPIIT) existing FDI policy, FDI is allowed in “insurance companies” and “intermediaries or insurance intermediary” and LIC does not fall in any of these categories.

Other rules such as the LIC Act, 1956, the Insurance Act, 1938 and the Insurance Regulatory and Development Authority Act, 1999 do not have a provision for FDI in LIC.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Earlier this month, LIC filed its papers with the regulator to launch an $8bn IPO by March 2022.

The government plans to sell 316.25 million shares or a 5% stake in the insurer, which is said to control over 60% of India’s life insurance market by premium.

The news comes amid the Russia-Ukraine crisis but government sources have assured that the IPO will proceed as planned.