FDI IN INSURANCE

FDI i.e; Foreign Direct Investment. Any time a vital topic to be discuss on. India has many sectors facing the FDI, for example, METALLURGICAL INDUSTRIES, AUTOMOBILE INDUSTRY, POWER, DRUGS, etc.

Coming to the topic of attraction FDI in Insurance, the question came to mind is does India needs the FDI in insurance sector. The government of 2014 initiated the FDI in insurance sector, The sudden change in the approach of NDA government on the stand of Insurance Bill passed, which had been presented by the UPA government in the year 2008, which makes the resident of India to think does India really need FDI in Insurance Sector? If we do why NDA had opposed it in 2008? Not the only policy facing the such circumstances..

The answer to the question depends on the pros and cons of FDI in insurance sector…

Pros…
1, By today we have about 10 companies in insurance sector, some are ventures of Indian companies with foreign companies, FDI in Insurance sector will provide additional source of finance for insurance companies.
2, As other FDIs this will promote development of insurance sector by bringing in more products & features in this sector.
3, This FDI will enhance the performance of domestic players as the sharing of the knowledge among the foreign investors is possible.
3, Those Companies which will be funded by the foreign player in our country will have more funds in their hands as well as may have the lower cost of capital, Thus efficiency results in cheaper and better cover to end consumers/ final consumers.
4, FDI in insurance as other global policies will introduce more competition in market and make market tending towards the idle form of market, which may decrease the price of the policies as well as will enhance the service of existing domestic players.
5, As past teaches us, the competition among the players teaches came with new strategies which will fruitful in betterment of management and will increase the focus of companies on consumer satisfaction. So, ultimately the ultimate consumer will be benefitted.

cons…
1, As most of FDI policy came with the majority percentage of stake holding with the foreign Investors, this would mean the higher control by the foreign investors over the Insurance companies, Which may come with some decisions which may not be in the favour of consumer of interest.
2., FDI is the Investment that is injected in our Economy by the foreign Financial institutions or Individuals, thus some or most of the amount earned in terms of profit may move out of our economy and may be invested over the other economy or in their own country.
3, As India has its own regulatory policies over the insurance sector, thus every other country has their owns, This may be possibility that we must provide the investors with some relief on the regulations in order to encourage the foreign investors to invest in our economy.
4, As mentioned above we already had many firms into Insurance sector, which means the competition already exist in our economy, we should see it that in way to increase the competition we came over a policy which discourage the domestic players in our economy.

In last, government should see to it that ECONOMY, DOMESTIC PLAYERS & CUSTOMERS all should attain welfare, It should make the policies and terms stronger to ensure the customers do get their deserved and promised benefits, as well as domestic players will not be discouraged and economy will enhance to next level.

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