Cabinet clears insurance privatisation

NEW DELHI, Nov 23 (UNI) — The Union Cabinet tonight cleared a proposal for opening up the insurance sector to the private sector subject to the condition that foreign equity holding not exceed more than forty per cent.

Another major proposal approved by the Cabinet was to introduce a Bill to amend the Patents Act to cover the area of exclusive marketing right. Work on another Bill relating to patent products would be undertaken simultaneously, Finance Minister Yashwant Sinha announced after the Cabinet meeting.

He said the Cabinet had also decided to grant statutory status to the Insurance Regulatory Authority and a Bill to this effect would be introduced in the coming session of Parliament.

Mr Sinha said the Cabinet had decided to allow a ceiling of 26 per cent to foreign collaborators in the insurance sector while the balance 14 per cent could be taken up by foreign financial institutions, non-resident Indians and other corporate bodies. Sixty per cent equity should be held by Indian promoters, he said.

While presenting the Budget in July, the Finance Minister had announced plans to open up the insurance sector to the private sector. But the issue was referred to a group of ministers following disagreement on the quantum of foreign equity holdings.

It may be recalled that former Finance Minister P Chidambaram was forced to withdraw the IRA Bill introduced in the eleventh Lok Sabha following protests from the Bharatiya Janata Party, which wanted the United Front government to give an undertaking that it would not allow foreign companies to enter the insurance sector.

The Cabinet had on November 18 deferred a decision on a comprehensive amendment to the Patent Act following differences among the Cabinet members and also sought more details from various departments.

The government has to clear a part of the proposal to amend the Indian Patent Act, 1970 to meet the deadline set by the World Trade Organisation (WTO) i e April 19, 1999, to bring it in line with international practices.