India’s Cabinet approves 100% foreign investment in insurers: official
The move aligns with New Delhi’s broader strategy to attract global investors
[NEW DELHI] India’s Cabinet has approved a proposal to allow 100 per cent of foreign direct investment (FDI) in the insurance sector, a government official said.
The move is aimed at accelerating capital inflows and expanding coverage in one of the world’s fastest-growing insurance markets.
In the federal budget for 2025 to 2026, the government proposed removing limits on FDI in the insurance sector, from the current 74 per cent.
It also said that existing regulations and conditions governing foreign investment in the sector would be reviewed and simplified.
The proposal will be introduced in parliament on Monday (Dec 15), the official told reporters in New Delhi, asking not to be named as the information is not public.
Removing the FDI cap is expected to attract much-needed capital and global expertise, helping expand insurance coverage.
At 1 per cent of gross domestic product, general insurance penetration in India was relatively lower than the global average of 4.2 per cent in 2023, government data shows.
The move also aligns with New Delhi’s broader strategy to attract global investors, amid a push to finance infrastructure expansion, and accelerate the country’s transition towards becoming a developed economy by 2047.
While the move may encourage more global players to explore India, translating that interest into a meaningful scale will depend on how effectively new entrants can navigate this distribution landscape.
Even when the FDI limit rate was raised to 74 per cent from 51 per cent, “penetration did not change meaningfully – and it did not bring a surge of foreign capital either”, said Kamlesh Rao, chief executive officer of Aditya Birla Sun Life Insurance.
Regulators, including the Insurance Regulatory and Development Authority of India, will have to issue detailed guidelines on solvency, governance and board composition for fully foreign-owned insurers. BLOOMBERG
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