The Government of India has decided to allow 20% Foreign Direct Investment (FDI) in LIC (Life Insurance Corporation). This is to be done by amending the Foreign Exchange Management Rules (FEMA).
Currently 74% of FDI is allowed under the automatic route in the insurance sector. However, these rules do not apply to LIC as it is administered through a separate LIC Act.
According to the Securities and Exchange Board of India (SEBI), both foreign portfolio investment and FDI are permitted under the public offer. However as the LIC Act does not have the provision for foreign direct investments, there is a requirement to align LIC’s proposed initial public offering with SEBI norms regarding foreign investor participation.
