India moves closer to insurance market reforms
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(Reuters) — India's main opposition Congress party signaled on Monday it could support government legislation to liberalize the insurance industry, a long-delayed reform expected to help improve investor confidence.
Prime Minister Narendra Modi proposed in August to lift the cap on foreign investment in insurance ventures from 26% to 49%, but the opposition blocked the move in the upper house of parliament, where he lacks a majority.
On Monday, Congress appeared to soften its stand on insurance reform and a constitutional amendment for a national goods and services tax that the government plans to seek in a parliamentary session that began earlier in the day.
“Both the bills are our babies, we will see the nitty gritty. If our concerns are met, we have no reason to oppose them,” Congress spokesman Abhishek Manu Sanghvi told reporters.
A previous Congress government had itself sought to open up the insurance sector to inject more funds into the world's 10th largest market, where fewer than 4% of Indians have coverage.
But it failed to push through any reform because of a lack of support in parliament, including from Modi's Bharatiya Janata Party then in opposition.
Mr. Modi won a strong mandate in the election to the lower house of parliament this May. But his BJP holds less than a fifth of seats in the 245-member upper house, and he needs the support of the Congress party to get his reform agenda through.
The government also wants to introduce a uniform goods and services tax, a reform measure aimed at ending the practice of paying different taxes in each of India's 29 states.
But the government will likely face strong resistance to any moves to weaken the land acquisition law that the Congress government brought to ensure adequate compensation to landowners, a party leader said.
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