Though Manulife has signed up with UTI for providing only technical assistance, it is perceived as its overseas collaborator in a life-insurance company as and when the sector is opened up to foreign equity.

Lest the expression of intent by UTI and a foreign-insurance company to collaborate in the sector upset the unions in the state-owned Life Insurance Corporation and General Insurance Corporation, the ministry has advised Unit Trust to keep the agreement under wraps. The ministry does not want to give the MoU as a stick to the unions to beat it with, sources said.

Besides UTI, two other state-owned entities StateBank of India (SBI) and the Industrial Development Bank of India (IDBI) have also expressed a keen interest in insurance, but both have so far dithered from announcing a possible foreign partner. Both SBI and IDBI have been wooed by foreign companies as their credentials in the financial sector are expected to ensure a licence when the sector opens up. ICICI, which has announced Prudential of UK as its future joint-venture partner, can no longer be termed a government company. UTI's agreement with Manulife comes after long months of negotiations with perhaps every major life-insurance company in the world. As a strong retail network will be of critical importance in marketing life insurance, UTI has been at the top of the list for a joint-venture partner with every foreign company.

UTI has about 90,000 agents dedicated to it across the country. A sales staff of this kind, familiar with the marketing of a financial product, is unique to UTI. Compared to the sales infrastructure of a large networknationalised bank, the UTI network is considered superior. This is because the Trust's agents, compared to the disgruntled staff of a bank, are aggressive salespersons.

Union finance minister Yashwant Sinha had proposed in the budget to open up the insurance sector to domestic companies. The cabinet was slated to take up the issue of defining an Indian company last week, but it could not do so on account of preoccupation with the rolling back of the special-additional duty. The cabinet is expected to decide soon what should be called an Indian company, because according to company law, even a wholly owned subsidiary of a multinational firm incorporated in India is an Indian company.

The government decision on an Indian company is now expected some time next month. It is likely to be announced after special secretary-insurance BK Chaturvedi and Insurance Regulatory Authority chairman N Rangachary return from their US visit. They are due to leave for the US early next month.