The joint venture will have a capital base of Rs 100 crore in which Max India will pick up a stake of 74 per cent while New York Life will subscribe to 26 per cent as prescribed in the Insurance Regulatory and Development Authority Bill. Addressing a news conference, Analjit Singh, vice-chairman of Max India, said the new company - Max New York Life - will target the 350-million strong middle class in India which is looking for quality products and better quality services.

At present, life insurance is provided only by government-owned LIC and its inefficiency is legendary. Max New Life wants to exploit LIC's biggest weakness customer dissatisfaction. The companywould start a nationwide research programme asking consumers what kind of products and services they want. The company will, subsequently, launch products on the basis of the feedback.

The new company will apply for a licence to the Insurance Regulatory and Development Authority as soon as the Parliament clears the bill. The bill is expected to be passed by Parliament when it convenes for winter session later this month. LIC employees have already gone on a one-day strike to protest against the entry of private players in the industry.

Max India is a diversified company which makes bulk drugs and interests in healthcare and telecommunications. "There is a minimum capital requirement of Rs 100 crore that is proposed to be stated in the Act. That is the starting point but not the ending point. The business will require more than Rs 100 crore in our view. You are going to see capital far in excess of Rs 100 crore," Singh said.

Gary Benanav, chairman of New York Life Insurance, said the Indian marketoffered enormous opportunities as the insurance penetration was very low compared to that in developed countries. The market share of existing firms was expected to come down once the sector was opened up, he said. "The share of local firms may get smaller, but their volumes grow. Everybody succeeds," Benanav said. "When Taiwan opened its market in 1988, life insurance sales were approximately one per cent of GDP. Once that was opened up and foreign companies allowed, that market grew rapidly. Today that market is over 3 per cent of GDP."