Finance Minister Nirmala Sitharaman in her Budget speech 2025 has proposed to increase the foreign direct investment (FDI) limit in the insurance sector from 74% to 100%, a move expected to bring more players into the market and drive innovation.
“With 100% FDI now allowed in insurance, India could be on the path to having 1,000 insurers within the next decade. A larger number of players will intensify competition, leading to enhanced innovation, customer-centric products, and improved service delivery. More insurers mean greater awareness, wider choices for consumers, and a stronger push for financial protection across all segments of society,” said Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance.
India, with its vast and diverse population, has immense untapped potential in insurance. “In many developed economies, thousands of insurers operate to meet the varied needs of their citizens. For India to achieve deeper insurance penetration, expanding the number of players in the industry is crucial,” he said.
With global insurance companies now able to invest fully, the introduction of new and innovative products is anticipated tailored to meet the diverse needs of Indian consumers.
Pavanjit Singh Dhingra, Joint Managing Director of Prudent Insurance Brokers said, “The increased FDI limit to 100% will provide the much-needed growth capital for the industry. With global companies seeking investment opportunities in India, this move will lead to greater innovation, enhanced capacity, and more choices for consumers, both in terms of products and services. It will also expand coverage options for businesses, cyber risks, and credit protection. The government’s decision aligns with its broader vision of ‘Insurance for All by 2047.’
This reform is about more than just increasing capital inflows—it is about transforming the insurance landscape to ensure that every individual and business has access to risk protection. As competition intensifies, the sector is expected to become more transparent, with faster claims processing and stronger consumer trust. Ultimately, these developments will drive economic growth, build financial resilience, and create a more inclusive insurance ecosystem for India.
“The recent increase in the foreign direct investment (FDI) limit from 74% to 100% in the insurance sector is another significant development for the industry, which is expected to accelerate insurance inclusion across the nation. This move is likely to attract substantial foreign capital while also fostering innovation and improving service quality through technological advancements. As a result, global insurance companies can now invest fully, and we anticipate the emergence of innovative products and services tailored to meet the diverse needs of Indian consumers,” said Sharad Mathur, Managing Director and CEO, Universal Sompo General Insurance.