49pc FDI in India insurance sector healthy: ACLI

New Delhi, Jan 19: American Council of Life Insurers (ACLI) has said the existing FDI cap of 26 per cent on foreign insurance companies should be raised to 49 per cent for healthy competition.

The statement came immediately after Finance Minister P Chidambaram's indication to open up the Indian insurance sector upto 49 per cent for foreign direct investment (FDI).

''We intend to do 100 per cent business with India and these caps demoralise the foreign companies to foray into the India market. For a healthy competition, there should not be any cap,'' said ACLI President and Chief Executive Officer Frank Keating.

Talking to mediapersons here last night, he said the government should emphasise on transparency instead of FDI to encourage the insurance sector.

Mr Keating, who is heading an ACLI delegation to India, also mentioned that India and China are the two leading economies of the world and just as China has its FDI cap at 50 per cent, India should also raise it.

It will be beneficial for India as there are only 15 insurance companies in India as compared to 400 life insurance companies in the US, an increase in FDI cap will give a boost to the sector as people will learn to invest their money into long term investment, he added.

Referring to UK Chancellor of Exchequer Gordon Brown's meeting with the Finance Minister regarding the raising of FDI limit, he emphasised that this shows that not only the US but others are also showing their interest to enter the lucrative Indian market.

UNI