The FM Nirmala Sitaraman announced an increase from 74% to 100 % FDI limit in the Insurance sector, but only for companies that invest their entire premium received in India. Earlier in 2015, the government announced an increase in the FDI limit from 26% to 49% and again in 2021 to 74%, and with this increase, the government also showed its intentions for a 100% FDI limit.
This FDI limit increase aligns with the government’s vision of Insurance for all by 2047, and It will be very beneficial for Indian Insurance customers as it will bring in more international competition, better products with a lower premium, more insurance penetration, and improve the operational efficiency of Insurance companies.
Companies that will benefit from a 100% FDI increase
As foreign investors can now have 100% ownership, it will be easier for Indian Private insurance companies like HDFC Life, SBI Life, ICICI Prudential, Aditya Birla Sun Life, and Star Health to Raise capital, expand distribution networks, and have more market penetration.
Companies that will not benefit from a 100% FDI increase
Companies that might not benefit from the FDI limit increase will be Government-owned insurance companies like LIC, NIACL, and GICRE because the government generally doesn’t sell stakes in the companies, so it will be harder for them to get capital and other benefits from foreign ownership.
Benefits for customers
Insurance buyers will get multiple benefits because of increased competition.
Benefits like better product offerings with more coverage, lower premiums for policies, better service quality, and Trust.
Written By Abhishek Das
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