FEMA provisions amended, 20% FDI in LIC allowed

New Delhi, April 17

The government has amended rules of the Foreign Exchange Management Act (FEMA), paving the way for up to 20 per cent foreign direct investment in the insurance behemoth LIC.

The government is planning to dilute its stake in LIC through the Initial Public Offering (IPO). LIC had, in February, filed the Draft Red Herring Prospectus (DRHP) before the markets regulator Sebi for the IPO.

Last month, Sebi had given approval to the draft papers and the insurer is in the process of filing a request for proposal with changes.

Following the Cabinet approval, the Department for Promotion of Industry and Internal Trade (DPIIT) on March 14 had amended the Foreign Direct Investment (FDI) policy to facilitate overseas investment in LIC ahead of the mega public offer.

FEMA notification was required to operationalise the provisions DPIIT issued through a press note.

“These rules may be called the Foreign Exchange Management (Non-debt Instruments) (Amendment) Rules, 2022,” said a gazette notification issued recently. —