FDI
Foreign direct investment, or FDI, has been hiked in defence and insurance.
India is the biggest buyer of defence equipment in the world. The FDI has been hiked to 49% (from 26%), however, the ownership of such joint ventures will stay with the Indian company.
In insurance too, FDI has been hiked to 49%, from 26%.
The insurance sector opened up for private players in 2002. Yet, only about 6% of Indians have an insurance cover. Long-term capital infusion is the need of the hour. The insurance industry has been calling for a hike in FDI to 49% (from 26%) since insurance is a capital intensive business with a very long break-even period. That has happened. In fact, shares in insurance companies had run up sharply ahead of Budget on hopes that the FDI limit would be raised.
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