NEW DELHI/MUMBAI: It took seven years, changes in government and U-turns by various parties, but lawmakers finally came good on India’s pledge to raise the overseas investment in insurance on Thursday night. After a short delay when the Left parties insisted on a vote being taken on some amendments to register their opposition, Rajya Sabha members approved lifting the ceiling to 49% from 26%, marking a significant success for the Narendra Modi government in getting a major economic reform through Parliament The Insurance Laws (Amendment) Bill had been passed by the Lok Sabha earlier this month but ran into opposition in the Upper House, where the government lacks a majority.But the government’s floor management was much better this time around, with BJP having convinced Congress to support the legislation. The move, which will replace an emergency decree issued last year, was welcomed by the industry. Bharti Group boss Sunil Mittal said joint venture partner Axa would be raising its investment to the new limit.This is a highly positive development which will bring the muchneeded investments for the growth of the insurance industry,” said Mittal. “It also underlines the government’s commitment to take forward its reforms agenda and drive economic growth while generating employment opportunities. Bharti and Axa remain fully committed to their insurance JVs and we can confirm that Axa will step up their equity investment to 49%. Bharti will soon move the application to FIPB (Foreign Investment Promotion Board) as per the new FDI (foreign direct investment) guidelines.”Chanda Kochhar, managing director & CEO of ICICI Bank, said: “The passage of the insurance Bill is a welcome and long-awaited development. It signals the commitment of the government to implementing reform and attracting global capital to support India’s growth.”Welcoming the development, SBI Chairman Arundhati Bhattacharya said, “With financial inclusion proceedings in full force, the timing of increase in limit for FDI in the insurance sector is a blessing in disguise. In our estimate, the FDI limit hike in insurance could result in immediate inflow of around Rs 20,000 crore. Furthermore, FDI hike in insurance is de jure increase in FDI limits for pension sector also.”MORE POWER FOR IRDA The passage of the Bill will also empower the Insurance Regulatory & Development Authority to draw up regulations aimed at the betterment of the industry, similar to what the Securities & Exchange Board of India does for capital markets, doing away with the need for it to approach Parliament for even minor changes.The move could also presage the emergence of a new market for reinsurance in India with the legislation providing for the entry of global companies such as Berkshire Hathway, Munich Re, Lloyds of London and Swiss Re. They can operate in India through branches similar to multinational banks, providing for flexibility. The passage of the legislation also alleviates concerns about policies getting stuck owing to resistance in the Upper House.“It will be seen as a signal that the government is able to move amendments and Parliament is functioning,” said Amitabh Chaudhry, managing director & CEO of HDFC Life. “Lots of new rules will come in.”Among those set to raise their holdings in joint ventures are Prudential and Bupa of the UK, Nippon Life of Japan and Metlife of the US. It’s estimated the move will bring as much as $3-3.5 billion in FDI, boosting India’s foreign exchange reserves. Almost all the overseas firms had committed to investing more after the ordinance was promulgated in December last year. The government has already framed rules for the sector based on the ordinance and these could be adopted after the amended law gets the President's nod.“The regulation bringing in additional capital will stimulate growth of Indian life insurance,” Hiroyuki Nishi, managing director of Nippon Life, told ET in an interview recently. “Also, attracting foreign insurers to come to the market will bring in new ideas and experience. We are looking at this as a huge business opportunity.”