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Govt raises FDI limit in pension to 49%

The government raised the limit of foreign investment in the pension sector to 49 per cent on Monday. The decision comes a month after the Parliament passed a law raising the cap in insurance sector to 49 per cent. 

The government has been moving fast in implementing reforms to attract more foreign investment in the country. Besides insurance and pension, it has opened up the defence sector for foreign investment. Investment in the pension sector would further promote the government's National Pension Scheme by encouraging foreign funds in the programme. 

Foreign investment in the forms of FPI, FII, QFI, FVCI, NRI and DR would be allowed under the 49 per cent FDI ambit for the pension sector. 

While investment up to 26 per cent is under the automatic route, control beyond 26 per cent shall require FIPB approval. "Foreign investment in pension funds will be subject to the condition that entities bringing in foreign equity investment as per Section 24 of the PFRDA Act shall obtain necessary registration from the Pension Fund Regulatory and Development Authority and comply with other requirements as per the PFRDA Act, 2013 and rules and regulations framed under it for so participating in pension fund management activates in India," said a press release.  

Pension funds due to their long-term maturity are beneficial for the economy as they provide for funding of infrastructure projects which the government is relying heavily upon to kick start growth. The decision to relax the limit in the pension sector will take immediate effect, the press release stated.

(Edited by Joby Puthuparampil Johnson)

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