The Union Cabinet recently approved a _____% foreign direct investment limit under automatic route in Life Insurance Corporation, an enabling provision aimed at attracting long-term foreign investors.

Solution

Ahead of the mega initial public offer of the Life Insurance Corporation in mid-March, the Union Cabinet recently approved a 20% foreign direct investment limit under automatic route in LIC, an enabling provision aimed at attracting long-term foreign investors to the issue. According to the amendment to the LIC Act through the Finance Act 2021, the government could dilute only a 25% stake in the insurer in the first five years and the government equity won’t fall below 51% at any point in time. So, 49% public float in LIC is a long way to go as well as full utilisation of the FDI limit.