In February 2022, the Union Cabinet permitted up to ______ foreign direct investment (FDI) under automatic route in Life Insurance Corporation of India (LIC).

Question

Question

This question was previously asked in

AAI Junior Assistant (Fire Service) Official Paper (Held On: 15 Nov 2022 Shift 1)

Answer 1

The correct answer is 20%.

Key Points

In February 2022, the Union Cabinet permitted up to 20% foreign direct investment (FDI) under the automatic route in Life Insurance Corporation of India (LIC).
The decision was made to facilitate foreign investment in the IPO-bound LIC.
Prior to this decision, there was no specific provision for foreign investment in LIC under the automatic route.
This move was aimed at making LIC's initial public offering (IPO) more attractive to foreign investors.
The approval is part of broader efforts to liberalize FDI policies in the insurance sector.

Additional Information

FDI in Insurance Sector
- The insurance sector in India has seen gradual liberalization, with the FDI cap being raised from 26% to 49% in 2015, and later to 74% in 2021.
- The increase in FDI limits aims to attract more foreign capital and enhance the growth of the insurance industry in India.
Life Insurance Corporation (LIC)
- LIC is the largest insurance company in India, established in 1956.
- It has a significant market share and a vast network across the country.
IPO (Initial Public Offering)
- An IPO is the process through which a private company offers its shares to the public for the first time.
- LIC's IPO is expected to be one of the largest in the history of Indian capital markets, aiming to raise substantial funds.