The foreign equity up to 26 per cent is allowed in the insurance sector. The entry of foreign partners has resulted in the sector attracting FDI of $543 million as on March 31. The private companies have created a niche for themselves, Bansal said while addressing a meeting of Insurance Australia Group in Sydney today.

An official release quoting him said they have been able to increase their share in the insurance market in competition with their counterparts in the public sector. As a part of the reform process, premium rates for non-life insurance products have been de-tariffed.

Bansal said in insurance sector though the growth in recent years has been significant, India is far behind the world averages and ranks 78th in terms of insurance density and 54th in terms of insurance penetration.

Bansal said Insurance Regulatory and Development Authority (IRDA) has granted registration to 37 insurance companies, which include 17 life insurance, 19 non-life insurance companies and one re-insurance company.

At present 17 insurance companies are operating in the general insurance side and 17 insurance companies on the life side.

Bansal said the banks also have entered the insurance sector in the form of corporate agencies or under referral arrangements to utilise the extensive and broad reach for marketing of insurance products.

He said IRDA has also notified micro insurance regulations facilitating insurers to tap the potential of rural markets.

He said India offers a stable investment climate as well as a huge market with a growing middle class. He said investor confidence in India was at an all-time high today. A.T. Kearney in 'The FDI Confidence Index 2005' has ranked India as the 2nd most attractive investment destination, just behind China.