THE PROMISE AND CHALLENGES OF INSURANCE REFORM
Mint Mumbai|November 25, 2024
One of the most awaited results of the hike in foreign holding is the infusion of capital
Aravind Venugopal

India's insurance industry, long seen as an underpenetrated yet promising market, is poised for a major transformation with the government's proposal to permit 100% foreign direct investment (FDI) in insurance companies and introduce composite licenses.

These reforms, if implemented effectively, could catalyze significant changes in the sector, attracting fresh capital, improving competition, and enhancing accessibility for consumers.

A landmark move The proposal to allow 100% FDI in the insurance sector marks a pivotal moment in the liberalization of India's financial services. Historically, foreign insurers were mandated to have Indian partners, with the maximum permissible foreign ownership capped at 74%. This structure, while aimed at safeguarding domestic interests, often deterred global insurance players from fully committing to the Indian market.

The proposed removal of the 74% cap will not only encourage global insurers to enter the market but also provide existing foreign investors the flexibility to expand their stakes or operations.

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