India to Reassess FDI Limits

The Indian government is set to reassess foreign direct investment (FDI) limits in the insurance, defence, and plantation industries, aiming to streamline related processes, according to a report by The Economic Times.

In the insurance sector, the current FDI cap stands at 74% for general and life insurance companies, with 100% FDI permitted for insurance intermediaries. Despite existing competition and profitability in the life insurance sector, a review is being considered to ensure smoother FDI flows and adherence to inter-ministerial timelines.

Additionally, the Confederation of General Insurance Agents’ Associations of India has urged the government to reduce the Goods & Services Tax (GST) on individual health insurance policies from 18% to 5%. The group argues that this reduction would encourage more people to purchase health insurance, enhancing social security. They highlighted that the renewal rate for retail health insurance policies is between 65% to 75%, indicating that many policyholders struggle to pay premiums due to frequent hikes and high GST rates.

In a related development, the Insurance Brokers Association of India (IBAI) has partnered with the Insurance Regulatory and Development Authority of India (IRDAI) to strategize for achieving “insurance for all” by 2047. Their recommendations include recognizing insurance expenditure as a valid Corporate Social Responsibility (CSR) activity, providing more career opportunities in insurance, especially for high school students, raising insurance awareness, and developing composite insurance products.

As India prepares to reassess its FDI limits and improve its insurance sector, these measures aim to bolster the economy, attract more foreign investment, and enhance social security through better insurance coverage.