Context: Rajya Sabha has passed the Insurance (Amendment) Bill, 2021. The Bill seeks to raise the FDI in the insurance sector to 74% from the current 49%.
Key Provisions of Insurance Amendment Bill 2021
Foreign investment

• Increases the maximum foreign investment in an insurance company from 49% to 74%.
• Enables “control and ownership” by foreign investors.
• However, such foreign investment may be subject to additional conditions as prescribed by the central government.

Sector Specific Conditions for FDI

• Mining and Exploration of metal and non-metal ore – 100% FDI through Automatic Route
• Coal & Lignite: 100% FDI through Automatic Route
• Defence Industry: 100%. However, Automatic is only up to 74%. Beyond 74%, it is a Government route wherever it is likely to result in access to modern technology or for other reasons to be recorded.
• Print Media and Digital Media: 26% through Government Route
• Intermediaries or Insurance Intermediaries: 100% FDI through Automatic Route
• E-commerce activities — 100% FDI through Automatic Route
• Single Brand Product Retail Trading — 100% Automatic
• Multi Brand Retail Trading: 51% through Government route
• Railways Infrastructure:100% FDI through Automatic Route in the construction, operation and maintenance of the railway transport sector: Suburban corridor projects through PPP model and High-speed train projects.

Prohibited Sectors: FDI is prohibited in

• Lottery Business including Government/private lottery, online lotteries, etc.; Gambling and Betting including casinos etc.; Chit funds; Nidhi company; Trading in Transferable Development Rights (TDRs); Manufacturing of cigars, cheroots, cigarettes, tobacco, or of tobacco substitutes
• Activities/sectors not open to private sector investment e.g.(I) Atomic Energy and (II) Railway operations (other than permitted activities).

Real Estate Business or Construction of Farm Houses

• ‘Real estate business’ shall not include development of townships, construction of residential /commercial premises, roads or bridges and Real Estate Investment Trusts(REITs) registered and regulated under the SEBI(REITs) Regulations 2014.