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India’s cabinet has approved a proposal to permit 100% foreign direct investment in the insurance sector, according to a government official. This decision aims to boost capital inflows and expand coverage in one of the world’s fastest-growing insurance markets.
The government had initially proposed removing the current 74% limit on foreign direct investment in the insurance sector in the federal budget for 2025-26. The proposal also included plans to review and simplify existing regulations and conditions governing foreign investment in the sector.
According to a Bloomberg report on Friday, the proposal will be introduced in parliament on Monday.
The removal of the FDI cap is expected to attract much-needed capital and global expertise to help expand insurance coverage in India. Government data shows that general insurance penetration in India was relatively low at 1% of GDP in 2023, compared with a global average of 4.2%.
This policy change aligns with New Delhi’s broader strategy to attract global investors as part of its push to finance infrastructure expansion and accelerate India’s transition towards becoming a developed economy by 2047.