Centre To Revise FDI Policy To Facilitate LIC IPO: DPIIT Secretary

According to the current FDI policy, 74 per cent foreign investment is allowed under the automatic route in the insurance sector. However, these rules do not apply to the LIC

The government will take a final call on the FDI matter after consulting with the Cabinet. Image: Getty

New Delhi: The Centre is revising the foreign direct investment (FDI) process to allow the upcoming initial public offering (IPO) of Life Insurance Corporation (LIC), according to news reports.

Quoting the Department for Promotion of Industry and Internal Trade (DPIIT) secretary, the report said that the government will take a final call on the matter after consulting with the Cabinet.

Anurag Jain, secretary in the DPIIT, said the current policy related to the sector will not facilitate the disinvestment process of LIC and, hence, needs to be revised, according to PTI.

“We are working on further simplification of the FDI policy. A very important point for further simplification is required urgently as we have to do the LIC disinvestment. So, we would be coming out with a revised FDI policy which will facilitate LIC disinvestment,” he said.

The matter is being discussed with the Department of Financial Services and Department of Investment and Public Asset Management (DIPAM). 

“We have had two rounds of discussions at my level and now, we have (DPIIT, DFS, and DIPAM) come on the same page. So, we are in the process of drafting those changes in the FDI policy. We will go to the Cabinet (for approval),” Jain said.

According to the current FDI policy, 74 per cent foreign investment is allowed under the automatic route in the insurance sector. However, these rules do not apply to the LIC, which is administered through a separate LIC Act.

On LIC disinvestment, Jain said that the Cabinet will approve the changes in the FDI policy.

According to Sebi rules, both FPI and FDI are permitted under public offer. However, sources said that since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation.

The Cabinet had in July last year approved the IPO of LIC and the stake sale is being planned in the current March quarter.

On the long-pending e-commerce policy, the secretary said the DPIIT is in the final stages of ‘giving touches’ to the e-commerce policy and the national retail trade policy.

The e-commerce policy “is finalised at my level and we have circulated that to other departments. Now we will have a higher level discussion... We will have discussions with departments on that and then we will finalise it...A lot of work has been done,” he said, adding that FDI is allowed in only the marketplace model and “I do not see any change in view on that”.