Govt clears 20 per cent FDI in LIC under automatic route

Government has permitted up to 20 percent Foreign Direct Investment (FDI) under automatic route in Life Insurance Corporation of India (LIC) with an aim to facilitate disinvestment of the country's largest insurer. Sources said that the decision in this regard was taken by the Union Cabinet, chaired by Prime Minister Narendra Modi on Saturday.  Department for Promotion of Industry and Internal Trade (DPIIT) had mooted the proposal to allow FDI in LIC, after taking views from the Ministry of Finance. The much-awaited initial public offering, IPO of LIC is expected to hit  the market in March and LIC's employees and policyholders would get a discount over the floor price.

As per industry estimates, the government expects to mobilise Rs 63,000-66,000 crore from the proposed share sale to meet its disinvestment target of Rs 78,000 crore for FY22. While LIC is yet to announce the IPO price, market estimates it to be Rs 2,000-2,100 per share. The existing FDI Policy does not prescribe any specific provision for foreign investment in LIC, which is established under the LIC Act, 1956. The FDI ceiling for LIC has now been made at par with that of public sector banks. Foreign investors may be desirous of participating in the IPO of LIC, and this change would facilitate FDI in LIC and such other bodies corporate, for which the government may have a requirement for disinvestment purposes, sources said.