Insurance and healthcare firm Max India is likely to offload nearly 5% stake in its life insurance joint venture, Max Life Insurance, with Mitsui Sumitomo Insurance, to long-term foreign financial investors.

The move follows the recent decision by the Indian Cabinet to approve the proposal to raise foreign direct investment (FDI) in the insurance sector to 49% from 26%.

The proposed increase in FDI is yet to be passed by the Parliament and could take shape in the upcoming winter sessions.

Max India and Max Life Insurance chairman Analjit Singh told Times of India, "Max India is under no obligation to divest additional stake to the existing joint venture partner.

"If we were to divest any stake, it would purely be a commercial decision to unlock the valuation from our life insurance business," Singh added.

The Japanese firm had purchased 26% stake in the insurance firm for Rs27.31bn ($525.1m) from US based New York Life Insurance in April 2012 and became a partner in the JV.

As the original joint venture partners since 2000, New York Life was granted the right to increase its holding to 49% in case the government relaxed FDI restriction of 26%.

Mitsui, however, has not been vested with such rights.