India has proposed to allow 100% foreign direct investment (FDI) in the insurance sector up from the current 74% on the condition that the foreign firms would invest the entire premium collected in India.
The Indian federal finance minister Ms Nirmala Sitharaman in her budget speech on 1 February 2025 while presenting the country’s budget for the financial year 2025-26 in the Indian parliament said, “The FDI limit for the insurance sector will be raised from 74% to 100%. This enhanced limit will be available for those companies which invest the entire premium in India.”
The FDI limit was raised from 26% to 49% in 2015 and further raised from 49% to 74% in 2021. Of course, permitting 100% FDI in the sector will require amendments in the following acts. Insurance Act 1938, the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999.
Speaking with Asia Insurance Review several industry leaders welcomed the proposal. Bajaj Allianz Life Insurance MD and CEO Tarun Chugh said, “The move to increase the FDI limit in the insurance sector from 74% to 100%, is a move set to bring in fresh capital and bolster the industry's financial strength. The decision reflects the government’s continued commitment to making India a prime investment hub for stable, long-term capital.
Mr Chugh said, “It will accelerate the adoption of global best practices, introduce innovative products, and elevate customer service standards. Additionally, the mandate to invest premiums within India ensures that these funds contribute to domestic economic growth and infrastructure development.”
Bajaj Allianz General Insurance MD and CEO Tapan Singhel said, "In many developed economies, thousands of insurance companies operate to serve the varied needs of their citizens. For a country like ours, achieving deeper insurance penetration requires a significant expansion in the number of players in the industry.
Mr Singhel said, “With the move to allow 100% FDI in insurance, we could see India moving towards a future with 1,000 insurers in the next decade. A larger number of players will bring greater competition. More insurers mean better awareness, wider choices for consumers, and a stronger push for financial protection across all segments of society.”
SBI General Insurance MD and CEO Naveen Chandra said, “Introduction of 100% FDI is set to drive deeper market penetration by attracting greater capital inflows, fostering competition, and integrating global best practices.
Lockton India CEO and country head Dr Sandeep Dadia said, “The extension of basic customs duty exemption on raw materials, components, and consumables for shipbuilding and shipbreaking for another 10 years is a significant boost for the maritime industry. As a leading insurance broker specialising in P&I, marine and shipping risks, we see this as a vital step that will accelerate industry expansion and increase the need for comprehensive marine insurance solutions.
“The increase in FDI limits to 100% will reshape the industry by unlocking greater capital inflows and this enhanced limit applies to companies that invest the entire premium in India, ensuring that foreign capital directly fuels domestic economic growth,” said Mr Dadia.
Acko General Insurance MD and CEO Animesh Das said, “The move to allow 100% FDI in insurance sets the stage for a tech-driven evolution in how we serve our customers. Coupled with a significant boost in health infrastructure, these measures lay the groundwork for a more connected, efficient, and accessible healthcare ecosystem. More than just a policy reform, it will act as a strategic enabler for the next phase of industry evolution.”
Galaxy Health Insurance Company MD and CEO G Srinivasan said, “The increase in FDI in insurance sector is very positive as it will help in bringing large capital required by insurance sector for the high growth the sector is expected to post towards the goal of Insurance for All.
Mr Srinivasan said, “The health care sector has received a boost with many measures. The increase in medical seats will add to availability of doctors for better healthcare. The setting up of day care cancer centres in all district hospitals is a welcome measure. The Prime Minister Public Health Scheme coverage for 10m gig workers will bring health insurance to large number of people.
Aviva India chief investment officer Balamurugan Shanmugam said, “The increase of limit from 74% to 100% in addition to brining in much-needed FDI into the country, will also bring in better technical capabilities and new propositions for the overall benefit of the customers.”
Law firm Cyril Amarchand Mangaldas partner (head-insurance) Indranath Bishnu said, “In 2021, when the sector was liberalised to 74%, we did not see too many control deals as there should have been. That was primarily attributed to the non-availability of suitable Indian partners. But now with 100% FDI and the non-reliance on strategic Indian partners, we are looking at a new era in the insurance sector.”