The landmark bill to liberalise the insurance industry, which marks Prime Minister Narendra Modi's first stab at legislative reforms, will now go to a parliamentary committee, which will submit a report later this year.
The bill proposes to increase the limit on foreign investment in insurance ventures to 49 per cent from the current 26 percent.
Modi took office in May vowing to restore economic momentum and end years of policy paralysis, but the Congress-led opposition which has a majority in the Rajya Sabha demanded that a parliamentary panel examine the bill, saying there was no hurry to approve the measure in the current session which ends on Thursday.
"The government wanted to hurriedly pass foreign direct investment in Insurance, I'm happy that its now gone to a select committee," said Trinamool Congress member of Parliament Derek O'Brien.
Modi's government expects that if the sector is opened further, insurers such as Canada's Sun Life Financial Inc, Prudential PLC Nippon Life Insurance Co, Italy's Generali and Dutch insurer Aegon NV will inject more funds into what is the world's 10th biggest life insurance market -- even though currently fewer than 4 percent
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