The Indian parliament opened the country's insurance sector to greater foreign investment, in the first new business law by the government that came to power in May promising economic reform.
Foreign investors will be able to increase their participation in Indian insurance companies to 49 percent, up from the previous cap of 26 percent, under the bill passed by the upper house late Thursday, dpa quoted Finance Ministry DS Malik as saying.
The ruling Bharatiya Janata Party (BJP) is in minority in the house, but was supported by the opposition Congress to pass the bill that had been stalled in parliament since it was first proposed in 2008.
The legislation cleared by the BJP-dominated lower house last week.
'The increase in foreign limit will help attract the much-needed long-term capital for the sector,' Confederation of Indian Industry chief Chandrajit Banerjee said.
The boost to the insurance sector would help meet the country's 'huge infrastructure financing requirements,' he said.
Shashwat Sharma, of international consultancy KPMG, estimated that additional investment of 200 billion rupees (3.2 billion dollars) was likely to flow into the Indian insurance sector in the next few years.
'There is a lot of interest among foreign insurance companies to enter the market here as it has a lot of potential of growth,' he told the IANS news agency.
The government of Prime Minister Narendra Modi is also pushing land reforms to stimulate investment in Asia's third-largest economy.