Foreign insurance firms hungering for a slice of India's insurance pie sense they could soon be rewarded for years of waiting. Union cabinet on Wednesday approved long-pending legislation to open the state-monopoly insurance sector to private Indian and foreign companies.

"It's looking good. This is the one thing many foreign investors have been waiting for," Sandy Davidson, British insurer Commercial Union's representative manager for India, toldReuters.

The Insurance Regulatory Authority Bill, which seeks to allow foreign companies to own up to 26 per cent of an Indian insurance firm, is expected to be presented in Parliament in the current session or at the latest in the winter session due next month. But it could be a year before the gate finally creaks open for the foreign companies who have queued for entry.

From the time Parliament passes the Bill, it will take between 9 to 12 months for licenses to be issued to new entrants, the chairman of the Insurance Regulatory Authority N Rangachary as saying on Thursday. The regulator will have to vet potential entrants' ability to make a mandatory initial equity investment of Rs 1 billion ($23 million) and infuse more capital later. Some foreign insurers say the initial outlay is too steep, and should be lowered. Liberalising the insurance sector is top of the agenda for Vajpayee's 24-party coalition, which has promised to launch sweeping economic reforms.

Insurance became a governmentmonopoly in India through two waves of nationalisation - 245 companies were merged to form the Life Insurance Corporation (LIC) in 1956, and 107 more were welded into four companies in 1973, under the umbrella of the General Insurance Corporation).

The government hopes large investments will flow in after the opening of the sector, a step long viewed as a litmus test for India's commitment to economic reforms. Insurance penetration in India is low, but a growing economy and a population of around one billion offer many opportunities.

Nearly 30 foreign companies have set up offices in India, many of them having struck alliances with local partners in anticipation that the government will open up the sector.