Budget 2025-26: FDI limit for insurance sector raised to 100 per cent

Finance Minister Nirmala Sitharaman on Saturday announced an increase in the FDI limit for the insurance sector from 74 per cent to 100 per cent in the Budget for 2025-26 as part of far-reaching reforms in the financial sector.

This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified, the Finance Minister said.

Budget 2025-26 aims to initiate transformative reforms across six domains which will augment our growth potential and global competitiveness during the next five years, she while presenting the Budget in Parliament.

One of these domains is the financial sector which encompasses sectors like insurance, pensions, bilateral investment treaties (BIT) and so forth, she said.

A forum for regulatory coordination and development of pension products will be set up, the Finance Minister stated.

Besides, to implement the earlier announcement on simplifying the KYC process, the revamped Central KYC Registry will be rolled out in 2025. A streamlined system for periodic updating will also be implemented, she added.

The Finance Minister also said that requirements and procedures for speedy approval of company mergers will be rationalised. The scope for fast-track mergers will also be widened and the process will be made simpler.

The FDI reforms assume significance as India has emerged as a hot investment destination with multinational giants such as Apple and Tesla looking for alternative supply chains after the US sanctions against China.

Prime Minister Narendra Modi recently said that the Indian automobile sector had attracted more than $36 billion in FDI over the last four years and this figure would go up several times in the coming years as he exhorted vehicle manufacturers to follow the mantra of ‘Make in India and Make for the World.’

Inaugurated the Bharat Mobility Global Expo 2025 at Bharat Mandapam in the national capital, the Prime Minister said that India presented a huge opportunity and is an ideal destination for investors. The government was paving the way for global investors to bring more FDI into the automobile sector which was technology and innovation-driven, he pointed out.

Sectors such as electronics have attracted major investments with the semiconductor units also coming up in the country for the first time.