New Delhi, Feb 3 (PTI) – The Indian government's proposal to raise the foreign direct investment (FDI) limit in the insurance sector to 100% is expected to attract significant overseas investments and drive technological advancements, industry experts have said.
With full foreign ownership now on the table, experts believe the move will bring in substantial capital inflows, enhancing innovation and competition in the insurance landscape. Aatur Thakkar, Co-founder and Director of Alliance Insurance Brokers, emphasized that the entry of global players would not only improve product offerings but also provide consumers with more tailored options.
"With international competitors entering the country, consumers can expect better products and services, empowering them with more choices suited to their needs," Thakkar stated.
Additionally, he highlighted the impact on gig workers, saying that the provision of health insurance for this segment would address a critical coverage gap, ensuring access to essential healthcare services and strengthening public health outcomes.
As part of her Budget 2025-26 presentation, Sitharaman proposed increasing the FDI limit in the insurance sector from the existing 74% to 100%, a move that is expected to reshape the industry landscape.
Debashish Banerjee, Partner at Deloitte India, noted that allowing 100% FDI would encourage foreign insurers to establish a stronger presence in India, leading to greater competition and benefiting policyholders.
"This change will not only attract more foreign companies but also introduce global innovation and centuries-old expertise, fostering digital and technological advancements in the industry," Banerjee said.
Rudra Kumar Pandey, Partner at Shardul Amarchand Mangaldas & Co, echoed similar sentiments, emphasizing that the move would infuse more capital, resources, and expertise into the sector.
"The increased FDI limit aims to bring in more competition, facilitate innovative solutions, and enhance insurance penetration while strengthening risk management practices," Pandey explained.
The government's decision to fully open up the insurance sector aligns with its broader financial sector reforms, positioning India as a more attractive destination for foreign investors while ensuring greater benefits for consumers and businesses alike.
With full foreign ownership now on the table, experts believe the move will bring in substantial capital inflows, enhancing innovation and competition in the insurance landscape. Aatur Thakkar, Co-founder and Director of Alliance Insurance Brokers, emphasized that the entry of global players would not only improve product offerings but also provide consumers with more tailored options.
"With international competitors entering the country, consumers can expect better products and services, empowering them with more choices suited to their needs," Thakkar stated.
Additionally, he highlighted the impact on gig workers, saying that the provision of health insurance for this segment would address a critical coverage gap, ensuring access to essential healthcare services and strengthening public health outcomes.
Gig Workers to Benefit from Social Security Scheme
In line with financial sector reforms, Finance Minister Nirmala Sitharaman announced a social security scheme targeting one crore gig workers engaged with online platforms. The government will provide identity cards and facilitate their registration on the e-Shram portal to ensure their access to essential benefits.As part of her Budget 2025-26 presentation, Sitharaman proposed increasing the FDI limit in the insurance sector from the existing 74% to 100%, a move that is expected to reshape the industry landscape.
Industry Experts Welcome Move
Experts in the financial and insurance sectors have welcomed the proposal, viewing it as a catalyst for growth, competition, and enhanced risk management practices.Debashish Banerjee, Partner at Deloitte India, noted that allowing 100% FDI would encourage foreign insurers to establish a stronger presence in India, leading to greater competition and benefiting policyholders.
"This change will not only attract more foreign companies but also introduce global innovation and centuries-old expertise, fostering digital and technological advancements in the industry," Banerjee said.
Rudra Kumar Pandey, Partner at Shardul Amarchand Mangaldas & Co, echoed similar sentiments, emphasizing that the move would infuse more capital, resources, and expertise into the sector.
"The increased FDI limit aims to bring in more competition, facilitate innovative solutions, and enhance insurance penetration while strengthening risk management practices," Pandey explained.
The government's decision to fully open up the insurance sector aligns with its broader financial sector reforms, positioning India as a more attractive destination for foreign investors while ensuring greater benefits for consumers and businesses alike.
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