The government today allowed 26 per cent foreign investment in insurance and allied activities. Government also permitted Foreign Institutional Investors (FIIs) and NRIs to invest in insurers within the stipulated cap. The decision will come into force with immediate effect.

Earlier, only FDI under the automatic route was allowed in insurance companies. This relaxation falls short of the demand of insurance industry which has been pleading for hiking the FDI cap in the sector to 49 per cent.

The Insurance Laws Amendment Bill which seeks to raise the cap, has been pending in Parliament since 2008 and is unlikely to be taken up in the ongoing session due to lack of political consensus.