(MENAFN - AFP) Indian lawmakers approved Wednesday long-awaited legislation to allow foreign investment in its pensions sector in a move aimed at drawing foreign capital and reviving flagging investor sentiment.
Parliament's decision-making lower house gave the green light to the Pension Fund Regulatory and Development Authority Bill, which was cleared by Prime Minister Manmohan Singh's government in 2012.
The lucrative sector was previously closed to overseas investors.
The draft legislation will become law after it is endorsed by parliament's upper house.
It will allow foreign companies to buy up to 26 percent in companies selling pensions.
Singh has been moving ahead with a reform agenda as he attempts to spur flagging economic growth and revive his own political fortunes.
Years of corruption scandals and policy paralysis have tarnished his image and that of his party, the left-leaning Congress which has united behind a push to open up new sectors of the economy to overseas investors.
The Indian rupee has shed close to 20 percent of its value this year, threatening to balloon the already yawning current account deficit of Asia's third largest economy further.
The government is aiming to raise the foreign investor cap in insurance to 49 percent from 26 percent but is not expected to attempt to do so in the current monsoon session which ends later this week.
The pensions and insurance sectors are key sources of funds for industrial projects as they hold money long-term.
The government has been anxious to have more foreign investment in the sectors to be able to tap funds for vitally needed projects to overhaul India's creaking infrastructure.
The pensions legislation is the latest move by the government to hike foreign investment limits in a range of sectors from retail to civil aviation.
But foreign investors have been mainly waiting on the sidelines until elections, due by next May, are completed.
Earlier in the session, parliament passed two other key measures on its agenda.
The first was a land acquisition bill stipulating the process for taking over property for industrialisation and other development purposes.
The other was a contentious food security measure to provide cheap grains to India's poor that stirred strong criticism over fears that it will balloon the country's subsidy bill.