The move sparked protests, resulting in adjournments in the assembly's two houses and verbal attacks on the government, which had kept the proposal in cold storage for nearly four years over fears it would meet political resistance.
Junior finance minister P. K. Bansal was interrupted by leftist MPs who tried to snatch papers as he revealed plans to almost double the cap on overseas capital from the existing 26 percent, a move he said would attract foreign capital.
Private insurance companies are delighted by the plans but the measure may not be passed in the current session of parliament because of insufficient time.
India must hold general elections by May 2009, meaning the measure could have to wait for a new government.
Foreign insurers have said increasing the limit is important as it will allow them to expand their array of products and improve distribution channels.
Four-fifths of India's 1.1 billion population has no insurance cover and around 90 percent have no pension scheme, forcing them to rely on savings and relatives in old age.
Marxists opposed to the move accuse the government of taking the step to help out cash-strapped companies in the United States.
"The government is trying to bail out bankrupt insurance industries in the US by inviting them to come to India," Marxist MP Brinda Karat argued in parliament.
So, try now
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