Union Budget 2025: 100% FDI announced for insurance sector
What's the story
As part of its Union Budget for 2025-26, the Indian government has announced a major hike in the Foreign Direct Investment (FDI) limit for the insurance sector.
The FDI cap has been increased from 74% to a full 100% in a move aimed at boosting foreign investment and strengthening domestic financial services.
The reform is expected to draw more international investment into India's insurance market.
Investment focus
Targeting premium income investment in India
Notably, the revised FDI limit is targeted at companies that commit to invest their entire premium income in India.
This is part of a larger government effort to realize "Insurance for All by 2047."
Currently, the insurance sector has 24 life insurers, 26 general insurers, six standalone health insurers, and one reinsurer—General Insurance Corporation.
Market expansion
FDI hike aims to attract financially strong global players
By raising the FDI limit to 100%, the government hopes to lure new entrants with the financial muscle required for policy underwriting in this capital-intensive industry.
This move is expected to supplement domestic giants like SBI, ICICI, HDFC, Tatas, and Birlas who already rule the roost.
Some foreign companies like Allianz—reportedly planning to part ways with its Indian partner Bajaj Finserv—may now look to enter the Indian market on their own.