Budget 2021: How higher FDI cap in insurance will benefit policyholders

Finance Minister Nirmala Sitharaman in the Union Budget for 2021-22 on Monday proposed to liberalize foreign direct investment (FDI) in Indian insurance companies to 74% from the existing 49%. While the much-awaited move is expected to provide access to fresh capital to some of the insurers, experts believe that the decision may also benefit individual policyholders.

According to Prasun Sikdar, managing director and chief executive officer, ManipalCigna Health Insurance, “The government’s move to increase the FDI limit will further attract foreign capital where required, ensure higher penetration and bring a new wave of transformative change to create a more value-based affordable healthcare for all Indians.”

The life insurance sector in India was opened up two decades back after the government had first allowed foreign companies to own up to 26% in Indian insurers in 2000.

Industry experts believe the government’s latest move will make the sector more competitive, transparent and efficient. “As an industry that plays an important role in securing the nation, the proposed increase will provide companies with committed funds to improve the penetration of insurance in the country.

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