The government needs to raise the ceiling on foreign direct investments in the insurance sector in order to attract overseas investments, the Federation of Indian Chambers of Commerce and Industry (FICCI) said yesterday.

The trade body suggested that in the insurance sector, the FDI cap can be increased from the current 49% to 74%, reported Press Trust of India.

"To increase FDI flows in this sector, the clause pertaining to Indian management and control needs to be re-looked,” said the FICCI. However, for the reinsurance sector, foreign investments can be restricted to 49% with Indian management and control, it added.

The body also said that there is a need to improve investor confidence in the supporting ecosystem in the country to attract more FDI inflows. Enforcement of contracts and the arbitration process need to be strengthened. “Even when awards have been given, enforcing the awards remains a challenge," it said.

The government allowed foreign insurers to increase their stakes in Indian joint ventures from 26% to 49% in 2016.