Now, 100% FDI in insurance

Nearly two and a half decades after the liberalisation of Indian insurance, Finance Minister Nirmala Sitharaman, in her eighth Budget speech on Saturday, announced the opening up of the sector to 100 per cent foreign direct investment (FDI), up from the previous limit of 74 per cent.

- SUBRATA PANDA

Industry insiders believe that this move will provide foreign insurers, who previously had to partner with an Indian entity to establish a presence in India, a clear and simplified pathway to set up shop in the country.

"This enhanced limit will be available for those companies that invest the entire premium in India.

The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified, Sitharaman said in her speech.

According to investment norms, insurers in India typically have their corpus invested in the country. However, there is a window available to invest overseas as well. As a result, a detailed review of the fine print, particularly regarding the requirement that the entire premium must be invested in India, is essential, industry experts said.

The opening up of the insurance industry to 100 per cent FDI comes at a time when the insurance regulator has been advocating "Insurance for All" by 2047, a goal that requires significant capital inflows into the sector through the entry of new players or capital expansion in existing companies.