FDI for growth

Foreign participation in insurance should increase competition

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Parliament this week cleared the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, raising the foreign direct investment (FDI) limit in insurance companies from 74 per cent to 100 per cent, enabling complete foreign ownership.

This marks the culmination of liberalisation, which began in 2000, when the sector was opened up to private players with a 26 per cent FDI cap. The limit was raised to 49 per cent in 2014 and further to 74 per cent in 2021. As of March 2024, 41 insurance companies had FDI and, as of September 2024, the industry had attracted nearly ₹82,847 crore in FDI since the reforms began, underscoring investor interest. The expectation is that higher FDI will attract more global insurers, boost innovation, and strengthen governance standards. Despite hosting around 73 insurers across the life and non-life segments, India's insurance penetration remains low at 3.7 per cent of gross domestic product, which is roughly half the global average.