The DPIIT or Department for Promotion of Industry and Internal Trade has recently mentioned approaching the Union Cabinet for relaxation in the FDI policy to accommodate LIC’s public market debut.
DPIIT Secretary Anurag Jain has been in discussion with the Department of Investment and Public Asset Management, i.e. DIPAM, and the Department of Financial Services, and together these 3 departments have reached unanimity.
In his recent meeting with the press, Mr. Jain clarified this matter by stating that it is now a matter of drafting this proposal. Also, they are planning to hold an inter-ministerial consultation to seek approval.
He further added that the Honourable Finance Minister eyes to complete this by the end of this fiscal year. Hence, everybody needs to work to take care of that deadline.
What is the Current FDI Policy?
The current FDI policy states that 74% of foreign direct investment is permitted in the insurance sector via automatic route. However, these rules do not apply to LIC as a separate LIC Act to administer this company.
Additionally, SEBI rules permit both FDI and FPI (Foreign Portfolio Investment) for any public offer in India. Since the LIC Act supposedly has no provision for foreign investment, it needs revision. This will bring the proposed public offering of LIC in line with SEBI rules regarding foreign investments.
The Union Cabinet greenlighted the IPO of LIC last July, but no confirmation is yet to be available on when it will happen. However, the previous budget mentioned that this public issue would go live by the end of FY 2021-22.
Other Highlights of this Press Meet
Besides the highly anticipated LIC IPO, the Secretary of DPIIT has also shed light on the matter of startups planning to list outside India. When asked about why Indian startups are planning direct overseas listing, he said they are examining this issue to comprehend what these companies are looking for. He further added that they are talking to some of the industry leaders to get further clarification on this subject.
Additionally, Mr. Anurag Jain also informed about the Startup Innovation Week that DPIIT is organizing. It will be the first of its kind event in India and will start on 10 January 2022.
Since 2016, DPIIT has recognized more than 60,000 startups and their contribution in generating employment to more than 6 lakh Indians.
What is Startup Innovation Week?
The Department for Promotion of Industry and Internal Trade is organizing this annual event to celebrate innovation and entrepreneurship. This event will bring in all the stakeholders from various business segments to share ideas and shape a better future.
This event will also include interaction, round table meetings, and the introduction of ONDC or Open Network for Digital Commerce digital strategy.
Launching LIC’s IPO is not going to be an easy task, especially considering the size of this company. However, progress has been made in recent times with lead managers being shortlisted, and government agencies are working to clear other regulatory hurdles before floating this IPO for a subscription.
Irrespective of the timeline, when live, this IPO will be a spectacle to witness, as the hype around it is something unique.
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Source: Business Standard
Frequently Asked Questions
- What is ONDC?
ONDC or Open Network for Digital Commerce digital strategy will be an open network model for India’s e-commerce scene. It will help buyers and sellers to conduct business through an open network, irrespective of what platform they use.
- What is the size of the LIC IPO?
This initial public offering of LIC of India is likely to be worth close to Rs. 1 lakh crore. However, the actual valuation may change depending on its embedded value.
- When will the DRHP filing of the LIC IPO take place?
There is no concrete news regarding the DRHP filing of the LIC IPO.
Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.