Now, with the current minister of state for revenue, banking and insurance hinting at the possibility of reopening the chapter, insurance sector reforms are once again in the limelight. There is a clear indication that the BJP government is not favourably inclined towards the entry of foreign insurance firms into the country. It would rather introduce domestic competition in the sector to begin with. This is the right approach. But considering that Indian players would want access to foreign technology and expertise in the field, the entry of foreign insurers, in some form or other,would be inevitable. In fact, allowing foreign insurance companies to set up shop in India has several advantages--availability of world class insurance products and services to Indian consumers being one. But these can be ensured even without ownership and control passing to foreign hands.

Foreign insurers are extremely keen to gain an entry into India for they consider the country as a hidden goldmine for insurance products. Even the most conservative estimates put the size of the domestic market at over Rs 1,80,000 crore in annual insurance premia. Therefore, the government can easily afford to make it mandatory for foreigners to enter India only through joint ventures with local firms holding the majority stake. Given the pull of the huge potential market, there is little doubt that foreign insurers will agree to stringent conditions for their entry.