Union Budget 2025: FDI limit for insurance sector hiked to 100%
- Union Budget 2025: Nirmala Sitharaman says the enhanced limit will be available for those companies which invest the entire premium in India
Union Budget 2025: The Union government raised the foreign direct investment (FDI) limit for the insurance sector from 74 per cent to 100 per cent. Finance Minister Nirmala Sitharaman made the announcement while presenting the Union Budget 2025 in Parliament on Saturday, February 1.
She said that the enhanced limit will be available for those companies which invest the entire premium in India.
“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,” Finance Minister Nirmala Sitharaman said while presenting the Union Budget 2025.
Welcoming this reform, Bandhan Life Insurance MD & CEO Satishwar B. said this move will attract capital and expertise, boosting market competitiveness.
“The Union Budget 2025 introduces significant reforms, particularly with FDI in insurance raised to 100%. India, with its rapidly growing economy and middle class, offers immense opportunities for global investors. This move will attract capital and expertise, boosting market competitiveness, driving innovation, and offering consumers more choices,” Satishwar said.
“The provision that this enhanced limit applies only to companies investing the entire premium in India further encourages domestic investment, strengthening India’s position as a global investment hub while ensuring long-term sector sustainability. We are optimistic that this move will pave the way for a financially secure Viksit Bharat,” he added.
Last November, the government floated several proposals for the insurance sector, including raising the FDI limit in Indian insurance companies to 100 per cent and enabling an insurer to carry on one or more classes of insurance business and activities.
The government had also sought comments on the proposed amendments to the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999.
The insurance regulator, the Insurance Regulatory and Development Authority (IRDAI), has committed to achieving “Insurance for All” by 2047.
Union Budget 2025: Focus on middle-class
The major focus of Sitharaman’s eighth Budget was on boosting middle-class income and spending.
In a big relief, Nirmala Sitharaman announced a cut in personal income tax, saying people earning up to ₹12.80 lakh per year will not have to pay any tax. The threshold was raised from ₹700,000.
The finance minister said a new Income Tax Bill will be introduced next week in Parliament to take forward the “trust first, scrutinise later” concept.
She said that over the past ten years, the government has implemented several reforms, including faceless assessments, for the convenience of taxpayers.
The bill is expected to simplify the current Income Tax law and make it easier to comprehend.
The government will also launch missions to push manufacturing and exports.
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First Published:1 Feb 2025, 01:19 PM IST
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