Berkshire Hathaway, promoted by billionaire Nebraska investor Warren Buffet, will become part of India’s auto insurance market. Berkshire Hathaway will position itself with an existing Indian corporation, Bajaj Allianz General. Entrance through an existing corporation is in response to Indian law which prohibits high level of direct foreign investment in certain industries. Specifically, in the insurance sectors, equity held by foreign direct investment is limited to 26%.
A modest initial investment of approximately $10.9 million (Rs 500 million) will fund operations. Overseeing operations is Ajit Jain, rumored successor of Warren Buffet and an IIT Kharagpur alumnus. Jain oversees Berkshire Hathaway’s reinsurance businesses. Buffett has indicated the possibility of future ventures in the country, scheduled in early 2011.
This venture will make it possible for persons in India to purchase automobile insurance online. Such services are needed in India, given the countries growing middle class population. This particular sector has been the catalyst for an increase in car sales which have skyrocketed over the last decade.