BUDGET
FDI limit for insurance sector to be hiked to 100% from 74%
This story was originally published at 13:18 IST on 1 February 2025
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--BUDGET: FDI limit for insurance sector to be raised to 100%
--BUDGET: Conditions for foreign invest to be reviewed, simplified
MUMBAI – The foreign direct investment limit for insurance companies will be raised to 100% from the current 74%, Finance Minister Nirmala Sitharaman said, while presenting the Union Budget for 2025-26 (Apr-Mar) on Saturday. She said this applies to all insurers who invest their entire premium within India.
"The current guardrails and conditionalities associated with the foreign investment will be reviewed and simplified," she said. The foreign direct investment limit in insurance was first raised from 26% to 49% in 2015 and further increased to 74% in 2021.
"The Budget 2025's increase in FDI to 100% from the current 74% will aid foreign insurers' interest in investing in the growing Indian insurance market, where we expect strong premium growth to boost profitability. Foreign investment is credit-positive for the Indian insurance sector as it increases product innovation and benefits areas such as capital adequacy, financial flexibility, and governance standards," Mohammed Ali Londe, vice-president and senior analyst at Moody's Ratings, said in a note.
After the announcement, shares of HDFC Life Insurance Co, SBI Life Insurance Co, and ICICI Prudential Life Insurance Co rose more than 3% on the National Stock Exchange. End
Reported by Kshipra Petkar
Edited by Avishek Dutta
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