Budget 2025: Finance Minister Nirmala Sitharaman has talked about increasing the FDI limit for the insurance sector from 74% to 100%. She has said that a forum will be set up for regulatory coordination and development of pension products. Let’s know what the insurance sector got in Budget 2025-26.
Finance Minister Nirmala Sitharaman has made a big announcement for the insurance sector in Budget 2025-26. Finance Minister Nirmala Sitharaman has talked about increasing the FDI limit for the insurance sector from 74% to 100%. She has said that a forum will be set up for regulatory coordination and development of pension products. A revised central KYC registry will be launched in 2025 to simplify the KYC process.
The Finance Minister said, “In the case of income tax, emphasis will be laid on trust first, then investigate. The new Income Tax law will come next week. Foreign direct investment in the insurance sector will be increased from 74% to 100%. This will ensure that the entire premium amount received by insurance companies from customers is invested in India itself. Under the Jan Vishwas Bill 2.0, more than 100 provisions will be removed from the scope of crime.”
Insurance companies were seeking tax benefits to buyers in the upcoming Union Budget and incentives to sell policies. According to the Insurance Regulatory and Development Authority of India (IRDAI), the country’s insurance penetration in 2023-24 will be 3.7 percent compared to 4 percent in 2022-23. The life insurance industry’s expansion declined marginally from 3 percent last year to 2.8 percent during 2023-24. In the case of the non-life insurance industry, the figure remained at 1 percent during 2023-24, same as in 2022-23.
India’s insurance sector premium growth expected to remain strong among G20 countries
An earlier Swiss Re report said India will lead the G-20 with an average premium growth of 7.3 per cent during 2025-29 and become the fastest growing insurance market in the group. Speaking about expectations from the budget, Neha Parikh, Vice President and Sector Head (Financial Sector Ratings), ICRA Ltd, said that given the weak solvency position of public sector general insurance companies, the announcement of allocation in the budget for their recapitalisation will be positive. Parikh said, “Given the low penetration in the insurance sector, the government may announce measures to encourage access, especially for small size policies.”
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