Finance minister Nirmala Sitharaman announced that the government will raise the FDI limit in the insurance sector to 100%. The enhanced FDI limit for insurance companies will be applicable to those that invest the entire premium in India, Sitharaman announced in her speech on Friday.
The current foreign direct investment limit in India's insurance sector is 74%. The move was along industry expectations.
The recent decision to raise the Foreign Direct Investment limit in the insurance sector from 74% to 100% is a game-changing reform that will bring long-term benefits to India's financial and healthcare ecosystems, Hanut Mehta, CEO and Co-Founder at Bimapay Finsure, said. This progressive move is expected to attract a wave of foreign capital, encourage competition, and accelerate innovation, all of which will enhance the accessibility and affordability of health insurance.
One of the most immediate benefits of this policy change will be its impact on pricing. As competition intensifies, insurers will be compelled to offer more cost-effective health plans, leading to a reduction in premiums. This will make health insurance more affordable for a larger segment of the population, ensuring that financial constraints do not prevent people from securing quality healthcare coverage.
Beyond affordability, increased foreign investment will serve as a catalyst for product innovation.
For the industry as a whole, the shift to 100% FDI will lead to stronger financial backing, better risk management, and a more resilient insurance market, Mehta said.
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