Finance Minister Nirmala Sitharaman has increased the FDI limit in the insurance sector from 74 percent to 100 percent in her budget speech on Friday. This will benefit companies in the coming time. Till now foreign insurance companies have to do business in India in partnership with Indian companies. Finance Minister Nirmala Sitharaman on Saturday increased the limit of foreign investment in the insurance sector under the new generation financial sector reforms.
Government will have to make these amendments
Finance Minister Nirmala Sitharaman said that this increased limit will be available to companies that invest a full premium in India. Existing security and conditions related to foreign investment will be reviewed and they will be simplified. To increase the FDI limit, the government will have to amend the Insurance Act 1938, Life Insurance Corporation Act 1956 and Insurance Regulatory and Development Authority Act 1999. Insurance Act 1938 is the major act providing legislative structure for insurance in India.
More employment will be generated across the country
This provides the outline for the functioning of insurance businesses and controls the relationship between the insurer, its policyholders, shareholders and the regulatory – Indian Insurance Regulatory and Development Authority (Irradai). The entry of more players in this region will not only increase penetration but will also create more employment across the country.
There are so many companies now
Currently, India has 25 life insurance companies and 34 non-life or general insurance firms. These include companies like Agriculture Insurance Company of India Limited and ECGC Limited. The FDI limit in the insurance sector was last increased from 49 percent to 74 percent in 2021. This was in 2015 when the government increased the FDI limit in the insurance sector from 26 percent to 49 percent. The government had earlier allowed 100 percent foreign direct investment in insurance mediators.
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