According to media reports, Mahindra & Mahindra Ltd (M&M) is in talks to form a general insurance joint-venture with the US-based insurance company Travelers Group.
The Indian utility vehicle maker had appointed global professional services provider KPMG to find a partner with technical experience for operating a general insurance company.
International insurers have been seeking to enter India's insurance market despite the Indian government constantly deferring decision on the much awaited Insurance Amendment Bill. The revised Insurance Laws (Amendments) Bill proposes to retain foreign direct investment (FDI) limit in insurance sector at 26% from 49% proposed earlier.
The Standing Committee was concerned that the increased role of foreign capital (49%) may lead to the possibility of exposing the economy to vulnerabilities of global markets which may lead to capital flowing outside the country and also endanger the interest of policyholders.
The Insurance Bill has accepted the proposal which includes foreign equity capital at 26%. But the insurance industry has been lobbying to liberalise the sector further as it believes that the capital-intensive sector requires continuous inflow of funds for expansion.