The government’s decision to increase the foreign direct investment limit in insurance from 49% to 74% is likely to accelerate growth and spur competition in the sector raising hopes of a flux of foreign capital into private Indian insurers. It is also likely to help local private insurers grow fast and expand their presence in India, which has one of the lowest insurance penetration levels globally. The insurance companies today are facing severe liquidity pressures and capital constraints, so solvency related issues as well, hence increment in FDI cap is much needed for growth of Insurance sector in India.

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