New Delhi, July 21: General Insurance Corporation (GIC), the national reinsurer, is considering the possibility of opening a branch in the Navi Mumbai special economic zone (SEZ).
“We are thinking of opening a branch in SEZ, just like State Bank of India has done. An internal study will be carried out in a week’s time to gain an overall perspective on the issue,” a senior GIC official said.
“The biggest advantage of operating via the SEZ is that we will be able to invest in a foreign land which the insurance regulator does not permit us to do. To my knowledge, it seems it is as good as opening a branch in London,” he added.
The SEZ scheme, which was launched in April 2000, aims to provide an internationally competitive duty-free environment for exports. The government has already approved 17 new SEZs, including Kulpi and Salt Lake in West Bengal, Gopalpur and Paradeep in Orissa, Visakhapatnam and Kakinada in Andhra Pradesh, Positra in Gujarat, Indore in Madhya Pradesh, Navi Mumbai in Maharashtra and Nangunery in Tamil Nadu.
The SEZs will be free from regulatory controls in the domestic tariff area and conceptually will operate in a manner akin to a foreign land.
GIC reckons that by setting up a branch in Navi Mumbai, it could circumvent a lot of regulatory hassles.
The official said: “Operating from that land will be totally tax-free for us and in addition we would not have to take any clearance from the Insurance Regulatory Development Authority (IRDA) or the Reserve Bank of India. However, we are sure that some sort of law of the land will prevail which we will have to adhere to. In all probability they will be less cumbersome than the normal raft of regulations.”
However, IRDA doesn’t quite see things in the same way. A senior IRDA official said, “We do not have any major problem if GIC plans to open a branch in the SEZ, but it will certainly have to take permission from the regulator and probably RBI as well.”
“It makes sense for GIC to work from an SEZ for the purpose of forming strong strategic alliances, collection of reinsurance premium as well as establishing its presence abroad,” the IRDA official said.