INDIA BUSINESS WORLD - APRIL 2006
THE MONTH THAT WAS

BIG-TICKET REFORMS IN INDURANCE AND RETAIL

THE government is set to press the pedal on big-ticket reforms. Expected to be rolled out in a month's time, these include permitting 100% FDI in insurance companies serving rural population, 49% FDI in all retail trades, incorporation of companies providing any kind of contract labour and free entry to A-grade global universities.

The FDI limit in the insurance sector is likely to be raised to 49%. Alternatively, the government is also considering a proposal to allow 100% foreign equity in specialised insurance companies limiting their activities to rural and agricultural areas. FDI in insurance sector is presently capped at 26%. These recommendations form part of the XI th Plan reform agenda expected to be announced once the state elections are over.

The government intends to introduce some radical reforms to achieve a sustained double-digit growth in the Eleventh Five-Year Plan (2007-12) period. An approach paper to the XI th Plan is being finalised for getting the approval of the National Development Council (NDC). It is expected to be released soon after the Assembly elections, sources said.

On FDI in retail, it is being deliberated that 49% foreign equity should be allowed in all retail trades. Considering impending political resistance to the move, an alternative of allowing 100% FDI in foreign branded and specialised retail chains has also been suggested. Commerce minister Kamal Nath has hinted at some major policy level changes in retail FDI.

In order to give the manufacturing sector a boost, a change in contract labour regulations is also expected.

• 100% FDI in insurance companies catering to rural market

• 49% FDI in retail trade

• Incorporation of companies providing contract labour

• Allowing free entry totopglobaluniversities
.