The finance ministry is not likely to accept the Parliamentary standing committee's recommendation on capping foreign investment for pension fund managers at 26 per cent.
"The pension business is different from insurance. It is closer to the mutual funds business. But the final decision on foreign investment has to be taken at the political level," said a finance ministry official.
Finance Minister P Chidambaram on Wednesday discussed the recommendations of the Parliamentary standing committee with his team of officials. Though the ministry is trying to push through the Pension Fund Regulatory & Development Authority Bill during the current session, officials said it was a race against time.
They added that the ministry will prepare a detailed list of amendments. "The process is expected to take time as the law ministry also has to vet the draft Bill before it goes to the Cabinet for approval," said an official.
The committee, which submitted its report last week, had proposed that the foreign investment limit in the sector be in line with the cap for the insurance sector.
At present, the government permits 26 per cent foreign investment in the insurance sector and had proposed to raise it to 49 per cent. The proposal has, however, not materialised since the Left parties are opposed it.
In a recent interview with Business Standard, Pension Fund Regulatory & Development Authority D Swarup had voiced that the foreign investment limit should be line with the insurance sector.
Officials said the standing committee's recommendation on tabling the regulations before the Bill was voted was contradictory. "The regulations have to be drafted by the regulator and the Bill seeks to establish a statutory regulatory agency," said an official.
On the committee's proposal to ban investments abroad, officials said global practice allowed such investments, which should be followed in India.
They added that the government was willing to accept other recommendations like appointing members from trade unions on the advisory committee.
Left or right
Final decision at political level since Left parties are opposed to it
Law ministry to vet draft Bill before it goes to the Cabinet for approval
- Standing committee wants ban on investments abroad, but global practice allows such investments