NEW DELHI: Finance Minister Nirmala Sitharaman, in her Budget 2025 speech, announced an increase in Foreign Direct Investment (FDI) limits for the insurance sector from 74% to 100%, but with restrictions. This move aims to attract more foreign capital while ensuring domestic investment in the sector.
Conditions for 100% FDI
The enhanced limit will be available only to insurance companies that
invest the entire premium collected in India. Additionally, the existing regulations on foreign investment will be
reviewed and simplified, Sitharaman said.
"The FDI limit for the insurance sector will be raised from 74% to 100%. This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified," she stated.
Also Read: 'No tax till income upto Rs 12 lakh per year', says FM SitharamanGovernment’s push for insurance reform
The move follows the Centre’s November 2024 proposals for amending key insurance laws, including:
- Raising the FDI cap to 100%
- Allowing insurers to operate multiple insurance businesses under a single entity
The government had sought industry feedback on proposed amendments to the
Insurance Act, 1938, the
Life Insurance Corporation Act, 1956, and the
Insurance Regulatory and Development Authority (IRDAI) Act, 1999.
'Insurance for all' by 2047
Insurance sector regulator
IRDAI has set an ambitious target of ‘Insurance for All’ by 2047. A large portion of India’s population and insurable assets remain uncovered, leading to
high out-of-pocket expenses and increased financial strain on public funds. The FDI reform is expected to
bring in capital, expand coverage, and reduce financial vulnerabilities.
Also Read: Fiscal deficit target pegged at 4.4%, no income tax on income upto 12 lakhs, govt to introduce new I-T bill in Parliament next weekIndia’s growth targets
The Budget comes amid economic projections that India’s GDP will grow between
6.3% and 6.8% in FY 2025-26, as per the
Economic Survey 2024-25. However, the survey notes that to achieve the
Viksit Bharat vision, India needs sustained
8% growth over the next two decades.
With this announcement, Sitharaman has presented her
eighth consecutive budget, further shaping the country’s financial and economic roadmap.
Get real-time updates on Budget 2025 and Income Tax Slabs on Times of India. Watch the full Budget 2025 speech video.The TOI Business Desk is a vigilant and dedicated team of journal...
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