British insurer Bupa proposes to increase its stake in its Indian joint venture, the first case of a foreign player raising its holding in an Indian insurance venture following a rule change.
The health insurer owns 26% of Max Bupa Health Insurance, which is 74% owned by Max India.
Bupa now plans to increase its stake in Max Bupa to 49% after Indian Prime Minister Narendra Modi's executive order is approved by parliament and will seek regulatory approval for that, the companies said in a joint statement on 5 January.
The firms, however, did not disclose the financial terms of the planned deal.
Modi, in late December, employed a rarely-used executive order to implement insurance and coal policy changes, displaying his tenacity to overhaul Asia's third-largest economy despite political opposition in parliament.
Under the executive order, known as an ordinance, foreign firms can increase their participation in insurance joint ventures to 49% from 26%, a potential lifeline for a sector starved of capital and bogged down by regulations.
However, not every foreign investor is expected to commit fresh funds right away as the orders have to be approved by parliament within six weeks of the opening of the next session - scheduled for the start of February – for it to become a formal law.
Though the insurance reform enjoys rare bipartisan support, there is a risk that it could meet the fate of the decree Modi recently issued to open up India's coal industry to the private sector.
A bill to convert the coal ordinance into a law failed to make progress in the parliament session that ended on 23 December, forcing the federal cabinet to renew it on 24 December, 2014.