US insurance cos seek majority stake

MUMBAI, NOV 15: American insurance companies sought majority equity stake in insurance joint ventures as compared to the present 26 per c...

MUMBAI, NOV 15: American insurance companies sought majority equity stake in insurance joint ventures as compared to the present 26 per cent. “There was not much difference between 26 per cent and 49 per cent as it would still leave the foreign partner with a minority stake… though it would mean pumping in more funds into the Indian economy,” said Dean O’Hare, chairman and chief executive officer of Chhub Corporation here today at the `Trade in services’ session of the US investment summit.

“We will take up the matter (to increase stake to majority) with the Indian government once the insurance bill in its current form is passed,” he said. Though the insurance executives of the United States agreed that the limit should be raised to 49 per cent, they added that a 49 per cent stake would not make any substantive difference in their status. Hence, it should go up to 51 per cent.

O’Hare warned if too may conditions were imposed on their functioning, then the US companies are “not interested”. It was against the spirit of free trade and against the objectives of the World Trade Organisation, he said.

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“The new Indian government’s avowed commitment of proceeding with the reforms in the banking sector was in itself a positive indication, he said.

It was also decided to recommend higher equity positions in private banks with foreign stake, while some of the members mooted the idea of US banks taking up majority stake in weak banks.

There was near unanimous agreement on the need to bring pension funds into the mainstream of investments, but with the caution that at present, only 10 per cent of their accretions should be allowed to be invested in the equity markets. Professionals should manage pension funds, they said.

Earlier, US Ambassador to India, Richard Celeste said there was substantial interest in the insurance sector by the US companies representing over $ one billion in investment. “Every American company is seeking a presence in India in all sectors from manufacturing to technology,” he said.

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Additional foreign direct investment of $ 4.6 billion is expected to flow into Maharashtra over the next three years, Maharashtra chief minister Vilasrao Deshmukh, quoting a survey done by the US Embassy, said.

"I am personally reviewing policies on business and investment, am dedicated to continuing the dialogue on policy issues and look forward to forge new partnerships in areas of infrastructural development," he told the delegation which included over 100 US business delegates.

Shashi Ruia, chairman of the Indo-US joint business council stressed the need to reduce barriers to trade in both countries and create a more conducive business environment.