DPIIT to Soon Approach Cabinet for Changes in FDI Policy to Aid LIC IPO: Secy

Industry secretary Anurag Jain said on Sunday that the Department for Promotion of Industry and Internal Trade (DPIIT) will soon approach the Union cabinet to seek its approval for changes in the foreign direct investment (FDI) policy to facilitate disinvestment of LIC. The issue has been discussed with the Department of Investment and Public Asset Management, and all have reached unanimity, he said.

“Now it is a matter of drafting it out.

We will try that soon we will make the cabinet note, after holding inter-ministerial consultation, (to) take the approval…It will be very soon,” said Jain.

The cabinet had approved the initial public offering (IPO) of LIC in July last year and the stake sale is being planned in the ongoing quarter. Expected to be the biggest ever in the Indian market, it’s pegged at about Rs.1 lakh crore.

As per the current FDI policy, 74% foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to LIC, which is administered through a separate LIC Act.

The LIC Act, which governs the insurer, dose not mention foreign investment and also limits any shareholder other than the central government to a maximum 5% stake. Moreover, the Securities and Exchanges Board of India rules allow both foreign portfolio investment and FDI under public offer.

The finance minister has directed that the disinvestment has to be completed during the current financial year, Jai said, adding “so we also have to work at that pace”.

STARTUPS

On the issue of direct overseas listing of Indian startups, the secretary said the department is still examining the matter to understand exactly what the startups want.

“To my mind there is nothing which stops them from doing (that).

Why do they want to go outside and list, what are the factors which are not there? We are engaged in the discussion with the industry leaders,” said Jain.

“I know there was a proposal which was under consideration.

There are views which need to be synchronized and come to a final conclusion. But I want to understand what exactly is really required. Why can’t it be listed…So we are still examining that,” he said. S-ET

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