Budget 2025: FDI Limit For Insurance Sector Raised From 74% To 100%

New Delhi: Finance Minister Nirmala Sitharaman, in her budget speech today announced a move to boost the insurance sector. The government has announced increasing the Foreign Direct Investment (FDI) limit in insurance from 74 per cent to 100 per cent, though this will come with certain restrictions. 

In her Budget speech today, Finance Minister Nirmala Sitharaman announced that the FDI limit for the insurance sector will be raised from 74% to 100%. She stated, "The FDI limit for the insurance sector will be raised from 74 to 100 per cent. 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."

This move follows proposals from the central government in November, which included raising the FDI limit for Indian insurance companies to 100 per cent and allowing insurers to engage in multiple types of insurance businesses and activities. The government had invited comments on the proposed amendments to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and Insurance Regulatory and Development Authority Act, 1999.

Insurance sector regulator Insurance Regulatory and Development Authority (IRDAI) has committed to achieving "Insurance for All" by 2047. A significant portion of India's citizens and insurable assets remain uninsured, increasing the risks of high out-of-pocket expenses, placing a considerable burden on public finances. This raise in FDI is expected to support the cause.

The budget session of parliament that began on January 31 and, according to schedule, will end on April 4. The budget speech outlined the government's fiscal policies, revenue and expenditure proposals, taxation reforms, and other significant announcements. With this Budget Presentation, Sitharaman has presented her eighth budget.

India's economy is projected to grow between 6.3 per cent and 6.8 per cent in the next financial year 2025-26, said Economic Survey 2024-25, tabled in Parliament on Friday. In another key guidance, the Economic Survey suggested that India needs to grow around 8 per cent for a decade or two to achieve its Viksit Bharat dreams, at a time when the country's growth showed weak progress in the first two quarters of the current financial year. (With ANI Inputs)