Budget boost for insurance sector: Sitharaman allows 100% FDI but T&C apply (original) (raw)

The government in its Budget for 2025-26 announced an increase in the FDI limit for the insurance sector from 74 per cent to a complete 100 per cent, a move that is aimed at boosting foreign direct investment (FDI) and enhance domestic financial services.

This pivotal reform is aimed at attracting greater international investment into the Indian insurance market, seeking this move for a long time.

Under the new framework, the enhanced FDI limit will be available specifically for companies that commit to investing the entirety of their premium income within India.

Also Read: Budget boost for insurance sector: Sitharaman allows 100% FDI but T&C applied

In conjunction with this reform, the Insurance Amendment Bill was to be tabled during the winter session of Parliament, but this did not happen. This bill was to open the doors for global players to independently enter the market while also granting individual insurance agents the ability to sell policies from multiple companies, marking a significant departure from the current single-association cap.

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These measures align with the government’s broader goal of achieving "Insurance for All by 2047."

Currently, the sector includes 24 life insurance providers, 26 general insurers, six standalone health insurers, and one reinsurer—General Insurance Corporation. The existing FDI ceiling for insurance companies is 74%, with intermediaries already enjoying eased restrictions.

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By raising the FDI cap to 100%, the government aims to attract new players with the financial muscle required to underwrite policies in this capital-intensive industry.

This measure is expected to complement domestic heavyweights like SBI, ICICI, HDFC, Tatas, and Birlas, which already dominate the sector. Notably, some foreign players, such as Allianz—reportedly planning to part ways with its Indian partner Bajaj Finserv—may now consider entering the Indian market independently.