India insurance move opens pension firms to 100% foreign holding

[NEW DELHI] India’s move to lift investment caps on the insurance industry also applies to the US$177 billion pension fund sector, paving the way for 100 per cent foreign ownership, according to the industry regulator.

The measure is an “enabler” that will help draw interest from global investors in the pension fund sector over time, Sivasubramanian Ramann, chairman of the Pension Fund Regulatory and Development Authority, said in an interview in Mumbai on Wednesday (Dec 18).

Ramann made the comments just hours before India’s parliament approved removing the foreign ownership cap on insurance companies from the current 74 per cent. Foreign investment in pension funds was also restricted to 74 per cent.

The pension sector in one of the world’s fastest-growing economies has not developed as much as the insurance industry, and was rated among the world’s weakest in a recent pension ranking. However, the regulator has rolled out a slew of reform measures, primarily aimed at providing a nest egg for the swathes of low-income masses in the most populous country.

Ramman said the pension regulator had previously received some feedback from foreign entities on investing in pension firms in India.

India’s insurance Bill now needs the President’s signature to be enacted as law.

Complete control allows insurers greater flexibility to position themselves in an economy where rapid growth is allowing a young population to plan for their financial futures.

The move comes amid a spurt of foreign investment in Indian banks, and as Wall Street firms increasingly rely on their Indian tech hubs to support global operations. BLOOMBERG