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June 1, 1998


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'The opening of the insurance sector does not necessarily exclude foreign participation by means of joint ventures with Indian companies'

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George Otto

Our company has been present in India for the last three years as a liaision office. We have an existing joint venture agreement with local Indian finance companies to establish an insurance joint venture as soon as the sector is opened. The amount of investment required depends on the sector (life or general insurance) and anticipated business volumes.

We anticipate that this will require at least a Rs 100 crore (Rs 1 billion) as initial investment.

The FM's announcement said that the sector would be opened to Indian companies. This means AN INDIAN REGISTERED COMPANY, and DOES NOT NECESSARILY EXCLUDE FOREIGN PARTICIPATION BY MEANS OF JOINT VENTURES with Indian companies.

We realise that the opening of the sector is politically sensitive. Therefore, it would require some time to get legislation through Parliament. We are committed in the long term to India and would be prepared to wait for this to happen.

The measures to encourage FDI flows is positive, but international investors are also looking at political stability, and issues such as the nuclear tests within the region raises some concerns for investors

The Budget should further enhance the advantages that India currently enjoys over the rest of Southeast Asia. The concern over political stability remains of some concern and the effect of the sanctions remains to be seen. China remains the main competitor for foreign investment versus India.

Foreign insurance companies will bring to India the lastest technology and products resulting in a wider choice and improved levels of service to the Indian consumer.

The battle is not yet lost, but it will remain an uphill battle and things like the bomb doesn't help. India must create an image in the international investor community as a safe, yet attractive long term investment.

George Otto, Chief Representative, Allianz AG, spoke on the Rediff Budget Chat.

Budget '98

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