Tuesday, April 5 2005 20:16 Hrs (IST) - World Time -

New Delhi: Government intends to hike the FDI cap in insurance from 26 to 49 per cent and work out a policy to allow foreign investment in retail, Finance Minister P Chidambaram said today (Apr 5, 2005).

"It is our intention to raise it (FDI cap in insurance) to 49 per cent," he said, adding even with 26 per cent FDI, many foreign companies have come to India and formed joint ventures with Indian companies.

Although Chidambaram had announced intentions to hike FDI cap on insurance from 26 to 49 per cent last year, Government is yet to table a bill to amend the IRDA Act for raising the foreign investment limit.

Chidambaram, who wrapped up the 15th Indo-German joint commission, said there are opportunities for German companies to enter India's insurance sector even at this stage.

Germany wanted India to further liberalise the insurance sector and extended cooperation in pension, social security and micro-finance sectors.

On banking, he said, "We are under WTO regime. Foreign banks have been allowed to operate as either branches, or subsidiaries, or acquisitions." The RBI has laid down the roadmap that enables foreign banks to acquire upto 74 per cent stake in private banks.

German Economics and Labour Minister Wolfgang Clement said German companies are keen to invest in infrastructure, especially roads, energy, airport and port sectors.