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Narendra Modi faces early resistance in insurance reform push

NEW DELHI: Plans by the government to allow more foreign investment in India’s still-small insurance sector have hit snags in Parliament, testing Prime Minister Narendra Modi’s campaign promise to push through reforms to revive the economy.

Over the past week, the government has twice sought to introduce legislation in the upper house of Parliament permitting 49 percent foreign participation in an insurance venture, up from 26 percent, but it has been blocked by the Opposition.

Finance minister Arun Jaitley has called the heads of political parties to a meeting on Wednesday in a bid to form a consensus behind the legislation so billions of dollars can flow into a sector starved of funds and held back by over-regulation.

Modi’s government expects that if the sector is opened further, insurers such as Canada's Sun Life Financial Inc, Prudential PLC Nippon Life Insurance Co, Italy’s Generali and Dutch insurer Aegon NV will inject more funds into what is the world's 10th biggest life insurance market — even though currently fewer than 4 percent of Indians have insurance.

Jaitley needs the support of the opposition in the 250-member upper house of Parliament where his Bharatiya Janata Party (BJP) and its allies have about 60 members. The ruling group faces no problem winning approval from the lower house, where it has a comfortable majority after an election in May.