The Indian government is considering raising the equity foreign holding limit in insurance companies to 49% from the current level of 26%. Several global insurers, including AIG, New York Life, Sun Life Financial, Allianz, Old Mutual, Chubb and Standard Life, have joint ventures with major Indian business groups or financial institutions and are major players. The insurance industry was opened to foreign investors in 2000, and since then the annual premium income has exploded from $8 billion to $21 billion. Despite being the worlds fastest-growing insurance market, India remains an attractive market, with insurance penetration at just 3%among the lowest of any major economy.
The Indian aviation sector, too, is poised for rapid growth and is indulging in a bout of capital raising overseas. Jet Airways, Indias largest and fastest-growing airline, has announced plans for an ADR to partly fund its fleet expansion. In the span of three years, eight airlines either have begun operations or are on the verge of doing so in India, and the domestic aviation sector is expanding by 20% a year. Despite rising energy costs, close to 550 new aircraft have been ordered over the next five years, making India the hottest market for aircraft.
Rising energy costs are having an impact on the behavior of Indias oil companies, which are working to diversify their overseas energy sources away from the Middle East. ONGC, the countrys largest exploration and production company, has said that it is doubling its annual output from Russias Sakhalin I field, where it has a 40% stake. ONGC has increased its stake in the field from 20%. By 2006 ONGCs share of oil will be 100,000 barrels per day.