Full FDI In Insurance Sector To Attract Global Players FM Sitharaman
Raising the limit will eliminate the need for foreign investors to find Indian partners for the remaining 26 per cent, easing the process of setting up their operations in India, effectively increasing the number of insurers in the country, she said in a written reply to Lok Sabha
By : Falaknaaz Syed
Update: 2025-07-28 11:00 GMT
Mumbai: While only four insurers currently have foreign direct investment (FDI) at the maximum permissible limit of 74 per cent, the government is hopeful that raising it to 100 per cent will eliminate the need for foreign investors to scout for Indian partners for the remaining 26 per cent, and help increase the number of insurers in the country.
Finance minister Nirmala Sitharaman informed Parliament on Monday that raising the FDI limit in insurance to 100 per cent will help the sector achieve its full potential by growing at 7.1 per cent per annum over the next 5 years, outpacing the global growth. The finance minister in Union Budget 2025-26 had proposed to raise the limit of foreign investment in insurance sector from the existing 74 per cent to 100 per cent.
Raising the limit will eliminate the need for foreign investors to find Indian partners for the remaining 26 per cent, easing the process of setting up their operations in India, effectively increasing the number of insurers in the country, she said in a written reply to Lok Sabha.
This will attract stable and sustained foreign investment, increase competition, facilitate technology transfer, and improve insurance penetration in the country, she said.
The decision to increase FDI component in a particular insurance company is made by its promoters, depending upon various factors such as capital requirement of the company, solvency requirement, future business plans etc, the minister said.
FM Sitharaman also said that India offers a compelling growth opportunity for foreign banks, and the government is actively
encouraging foreign investment in the banking sector.
encouraging foreign investment in the banking sector.
The FDI limit in insurance was introduced in 2000 with a cap of 26 per cent. This was gradually raised to 49 per cent in 2015 and 74 per cent in 2021. At present there are 34 general insurance companies including six pure health insurance companies besides 24 life insurance companies.