The government’s proposal to allow 100% foreign direct investment in insurance appears bold at first glance, but the fine print will decide whether the reform genuinely liberalises the sector or only shifts control while preserving older constraints in new forms.The key concern among insurers is the ambiguity surrounding capital deployment. The condition that all premium collections must be invested in India raises red flags. Policyholder funds are already restricted, but it remains unclear whether the same restrictions will now apply to shareholder capital. This uncertainty may cause hesitation among global insurers who otherwise see India as a growth market.
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