NEW DELHI, Aug 6: While all foreign companies and most domestic companies expressed their disappointment over the withdrawal of the IRA Bill, one section of the Indian industry cheered the development.

There is a strong lobby group within the domestic industry which is opposed to the entry of foreign companies in the Indian insurance sector. These companies have been lobbying with the government and especially the Bharatiya Janata Party (BJP) to ensure that the sector is opened only to the domestic companies. These companies feel that they should be given the first crack at the insurance sector.

Ironically, most of them have tied up with foreign insurance companies and, therefore, are unwilling to go public with their sentiments. This insurance industry version of the India Club is the only segment which was quietly jubilant when the news of the withdrawal reached the CII conference. One of the few persons willing to go on record on this issue was R S Gupta, the former chairman and managing director of National Insurance Company, a subsidiary of the General Insurance Company. Gupta retired from service and now heads the insurance division of Group Usha. ``The government should set up the IRA and accede to BJP's demand of allowing only Indian companies in the sector. The issue of the entry of foreign companies can be decided later,'' he said. ``Do you think the BJP is taking this stand without the domestic industry's support?'' he asks rhetorically.

According to other industry sources, the issue is of control of the joint venture. ``All Indian companies who have tied-up with foreign partners know that within two or three years of operation, they would have outlived their utility for the foreign partner. Also no foreign company is willing to give the Indian companies control of the joint venture. This has irked a lot of companies and therefore a couple of major groups have not tied-up with anyone,'' sources say.

Industry sources say that there has been hectic lobbying behind the scenes to ensure that foreign companies are not allowed in. But nobody is willing to go on record because they do not want to be seen as being weak and protectionist. Before the insurance industry was nationalised in the early 70s, several Indian industrial houses were involved in the insurance business. For instance the Tata Group ran New India Assurance; the Birlas ran Ruby Insurance; and the JK Group ran National Insurance Company.Sources agree that Indian companies will need MNC support to ensure that the services and products they provide are not outdated. ``One way out is that Indian companies be allowed technical collaboration with foreign companies. The foreign firms will be paid for their expertise while the Indian companies will remain in control and compete,'' says an executive.

CII meet turns sour

NEW DELHI: The timing was supposed to be perfect, but nothing worse could have happened. The international conference on insurance industry organised by the Confederation of Indian Industry (CII) was expected to coincide with the passing of the IRA Bill.

But the mood of optimism which prevailed in the morning of the conference soon gave way to disappointment and exasperation as the news of the withdrawal of the IRA Bill reached the more than 1000 delegates, many of them from overseas.

The theme of the conference `Tryst with Destiny' took on a dark meaning for the insurance industry as it became clear to foreign and Indian companies that they would have to redraw their business plans. Some companies who were on the verge of tie-ups were upset and so were the many foreign firms who have been waiting patiently for the opening up of the insurance sector.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.