India's largest business newspaper reports today that Warren Buffett is "keen on acquiring a majority stake in a state-owned general insurance company," but current rules limit foreign ownership.
The Business Standard, quoting sources involved in the planning of Buffett's visit to India next March, says he will "take up the issue" with the government during the trip.
According to the newspaper, foreign investors can't own more than 26 percent of an Indian insurance company. The government has proposed raising the limit to 49 percent, but that would still be short of majority control.
The sources tell the paper that Buffett's "fallback option" is to set up his own general insurance company or "acquire a significant stake in an existing company."
Another potential obstacle is that right now "the rules do not allow the government to shed stake in the four public sector general insurance companies - New India Assurance, United India Insurance, National Insurance and Oriental Insurance."
In addition, with all four of the state-owned companies generating profits, the government may not want to reduce its ownership.
Buffett told shareholders earlier this month that "we've looked a lot at being in the insurance business in India" and "people there will be living a lot better 20 years from now."
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