LONDON (Reuters) - India is swimming against the tide and its citizens will miss out on investment opportunities if it does not allow overseas insurers to invest more in the country, Britain's biggest insurer Aviva (AV.L: Quote, Profile, Research) said on Friday.

Aviva has a life insurance joint venture with Indian consumer goods maker Dabur (DABU.BO: Quote, Profile, Research), but its holding in the partnership is limited to 26 percent by foreign direct investment (FDI) rules.

"It's swimming against the tide. They do need to make steady progress on relaxing those unnecessary constraints," Richard Harvey, Aviva chief executive, told Reuters in an interview.

"Obviously we entered the Indian market in the expectation the government would be increasing those (FDI) shares in line with opening up that market and it is a matter of frustration to us."

Aviva said its life business in India, which has nearly 6,000 sales agents and around 1,700 staff, was growing strongly but it was keen to invest more.

India's ruling coalition would like to raise the foreign investment limit in the insurance sector to 49 percent from 26 percent but faces opposition from its communist allies.

"The government needs to be aware that the growth rate of the industry will be constrained, I believe, if further international capital is not allowed to come into the market place.

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