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Budget 2025: FM announces proposal to raise FDI limit in insurance sector to 100%
Nirmala Sitharaman said that the enhanced limit will be available for those companies which invest the entire premium in India.
Union finance minister Nirmala Sitharaman on Saturday announced that the Foreign Direct Investment (FDI) limit for the insurance sector will be raised from 74 to 100 percent.
“The FDI limit for the insurance sector will be raised from 74 to 100 percent. 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,” said the finance minister.
In November, the central government introduced proposals aimed at revamping the insurance sector. These included raising the Foreign Direct Investment (FDI) limit in Indian insurance companies from 74 percent to 100 percent, along with allowing insurers to engage in multiple types of insurance businesses.
The government has also sought public comments on proposed changes to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. Meanwhile, the Insurance Regulatory and Development Authority (IRDAI) has pledged to achieve “Insurance for All” by 2047.
India continues to face challenges with a large portion of its population and insurable assets remaining uninsured, which escalates the risk of high out-of-pocket expenses and places significant pressure on public finances. The proposed increase in FDI aims to alleviate this issue.
The ongoing budget session of Parliament, which began on January 31, will run until April 4. The budget speech covered key fiscal strategies, taxation reforms, revenue and expenditure proposals, and other major announcements.
This is the eighth budget presented by Nirmala Sitharaman. The 2024-25 Economic Survey projects India’s economy to grow between 6.3 percent and 6.8 percent in the upcoming 2025-26 fiscal year.
The Economic Survey also highlighted that for India to achieve its “Viksit Bharat” vision, it must maintain an 8% growth rate for the next decade or two, following slower growth in the first half of the current financial year.
