Vijayawada : Ch Kaladhar, LIC employees union leader said that hike in the foreign direct investment (FDI) to 100 per cent in the insurance sector will be neither beneficial to the Indian economy nor will it bring any benefit to the insuring public.

He said in statement here on Saturday that this move will only enable the foreign capital to gain greater access and control over the domestic savings. The All India Insurance Employees’ Association (AIIEA) is of the firm opinion that only domestic savings play the important role in the development of the economy.

India as a welfare state must have a bigger control over the domestic savings to fulfil the constitutional obligations. All the major foreign companies are already operating in the country in partnership with domestic insurers. The existing FDI limit of 74 percent is not an obstacle to the growth and expansion of the private sector.

Kaladhar recalled that Minister of State for Finance Pankaj Chaudhary informed the Rajya Sabha on December 3, 2024, that the present level of foreign equity in the insurance industry at Rs 31,365.57 crore (as on March 31, 2024) is only 32.67 percent against the permissible limit of 74 percent.

Kaladhar categorically made it clear that the FDI hike to 100 percent will disrupt the insurance industry as it will have a disastrous impact on the domestic companies if the foreign partners decide to withdraw from the Joint Ventures to run the business independently.

It is a fact that foreign capital comes in search of greater profits. This means that the target would be the high net worth clients and most profitable business as is the case with the totally foreign owned banks.

Such an eventuality would force the domestic insurers to compete for the most profitable business to the total neglect of the need for insurance to the lower middle classes and the marginalised sections of the society.