Amar Singh said that they will not support FDI in retail, but they might approve FDI in insurance to 49%. It will give a much needed boost to the Indian Insurance Industry if the FDI ceiling is increased to 49%, even though an increase to 75% or even 100% would be very beneficial for the Industry and the country at large.
Insurance being a long term commitment contract, is the easiest and most effective way to mobilize long term capital much needed for long gestation period projects like the infrastructure development. A healthy Insurance and pensions industry will give India the capital to fuel a growth in the infrastructure sector which will take India to the next level of development.
Increasing the FDI in insurance will also bring in foreign capital that will not be susceptible to flight like the FIIs, much needed in these days of economic turmoil.