The Hindu : Business : Insurance industry happy

Online edition of India's National Newspaper
Friday, Jul 09, 2004

Business

Business

Insurance industry happy

By K. T. Jagannathan

CHENNAI, JULY 8. The budget speech of P. Chidambaram has come as music to the ears of captains of the insurance industry. For, he has announced an increase in the cap on foreign direct investment in this sector to 49 per cent from 26 per cent.

This hike in sectoral cap has come as a pleasant surprise to the insurance industry given the compulsions of the UPA Government though the demand has been there for long.

"We believe this progressive recommendation in the first UPA Government budget will enable the industry continue to expand and widen the net of insurance protection,'' said Antony Jacob, Managing Director, Royal Sundaram Alliance Insurance Company Limited. "It is the best news I have got since I came to India," declared Frank Koster, Managing Director, ING Vysya Life Insurance Company Ltd.

"The Indian insurance industry has a huge untapped potential. Insurance as a business requires regular capital infusion. The raising of the equity cap will not only bring more money but also help in expanding the industry," felt Stuart Purdy, Managing Director of Aviva Life Insurance.

"The impact of budgetary announcements on insurance is good for the growth of the insurance sector and by raising the FDI in the private life insurance to 49 per cent from 26 per cent, the government has provided financial flexibility to the insurance companies", said Sam Gosh, Country Manager, Allianz and CEO, Allianz Bajaj Life Insurance.Even though Nani Javeri, CEO, Birla Sun Life Insurance Company, welcomed the increase in FDI limit in insurance sector, he said, "The levy of service tax on the risk premium needs more clarity to understand its impact on the industry, which is in its nascent stage of growth".

Augurs well for

automobile units

It is a feel good budget for the automobile industry. More than anything else, the tone of the budget speech has sent out positive signals for the industry as a whole, be it the car or commercial vehicle segment.

David Friedman, Managing Director and President, Ford India, said, "I do believe that the tone of the budget was set by the Common Minimum Programme. The budget has a broad based focus on agriculture, education and infrastructure that would give momentum to economic growth and development."

The Managing Director, Ashok Leyland, R. Seshasayee, is happy that the Government is not bogged down by ideological shibboleths that impede reforms.

He is also appreciative of the concerns shown by the Government to the needs of the underprivileged and the marginal citizen through efforts at micro management. At least from the commercial vehicle segment's point of view, the budget appears to augur well.

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