Full FDI in insurance may not shake sector

Foreign insurers might still opt for Indian partners

- NARAYANAN V

FOREIGN INSURERS MIGHT still prefer partnering with homegrown insurers or large corporates with strong franchises and distribution networks to enter the Indian market, despite the government fully opening the sector to foreign investors, feel industry players.

The Union Cabinet on Friday approved a bill to raise the foreign direct investment (FDI) limit in the insurance sector from 74% to 100%, aimed at attracting more capital flows, global expertise and boosting the country’s insurance penetration.

A bill to amend the insurance law is likely to be tabled in Parliament on Monday.

Kamlesh Rao, MD & CEO, Aditya Birla Sun Life Insurance, said even when the FDI limit was raised to 74% from 49%, insurance penetration did not change meaningfully, nor did it lead to a surge in capital inflows. India had increased the FDI cap to 49% in 2015, before raising it further to 74% in 2021.

So far, the sector has attracted about ₹82,000 crore in FDI inflows.