FDI limit raised to 74% in the insurance sector; this decision will strengthen

New Delhi: A major decision was announced in the Union budget, strengthening the insurance sector. The Foreign Direct Investment (FDI) limit for the insurance sector increased from 49% to 74%. Since the last few years, demand was being made that the FDI limit in the insurance sector should be raised. The decision is welcomed by the companies and analysts from the insurance sector. It is claimed that the insurance sector will emerge stronger; its share in the GDP will increase.

The decision strengthening the insurance sector was announced in the union budget presented by Finance Minister Nirmala Sitharaman on Monday. According to this, the FDI limit in the insurance sector has been raised to 74%. This limit was 49%. In 2015, the FDI limit in the insurance sector was raised from 26% to 49%. After that, the major flow of foreign investment was seen in this sector. Many Indian companies entered the field, in collaboration with foreign companies. A healthy competition started in this field after this.

There is a humungous opportunity in the insurance sector in India. Because of this decision in the insurance market, a major opportunity have been made available even for foreign companies. The companies from this sector were consistently demanding a raise in the FDI limit. It is claimed that this will also help in bailing out the insurance companies facing crisis.

The share of the insurance sector in the Gross Domestic Product (GDP) is 3.6%. This share is very small as compared to the international average. The world average of the share of the insurance sector in the GDP is around 7.13%. Moreover, the share of General insurance, which stands at 2.88% on the global average, is only 0.94% in India’s case. It is being underlined that this goes to show the tremendous opportunity for growth, available in the insurance sector.

The government has already approved 100% FDI in the Insurance intermediary sector. Insurance intermediaries are the companies involved in brokering, Corporate agencies and insurance marketing. Analysts claim that with an increase in FDI limit in the insurance companies, capital availability will increase in the sector and the sector will progress. As per experts, this will also increase employment opportunities on a large scale.