Union Cabinet allows up to 20% FDI in LIC: Reports

28 Feb 2022 , 05:54 PM

According to the media reports, the Union Cabinet has permitted up to 20% foreign direct investment (FDI) under automatic route in the state-owned Life Insurance Corporation (LIC). It aims to facilitate disinvestment of the country’s largest insurer, as per media sources on Saturday.

This comes ahead of its proposed initial public offer (IPO), which is expected to be the largest in the Indian capital markets so far.

As per industry estimates, the government expects to mobilise Rs63,000-66,000 crore from the proposed share sale to meet its disinvestment target of Rs78,000 crore for FY22.

The insurance company plans to float a stake of 5% to raise about $8 billion next month for the South Asian nation’s largest initial public offering (IPO) by far.

While LIC is yet to announce the IPO price, the market estimates it to be Rs2,000-2,100 per share.

The existing FDI Policy does not prescribe any specific provision for foreign investment in LIC, which is established under the LIC Act, 1956. The FDI ceiling for LIC has now been made at par with that of public sector banks.

Further, the media reports said the government expects this move, along with other simplifications in FDI policy, to “make India an attractive investment destination”.

FDI inflows into India rose to $81.97 billion in 2020-21, from $ 74.39 billion in 2019-20.

“The FDI policy reform will further enhance Ease of Doing Business in the country, leading to larger FDI inflows and thereby contributing to the growth of investment, income and employment,” it added.