The Cabinet has approved the amendment in the Insurance Act, 1938 to pave the way for 74 percent foreign direct investment (FDI) in the insurance sector. At present, 49 percent FDI is allowed in life insurance and others. Finance Minister Nirmala Sitharaman had announced the FDI limit in insurance to be 74 percent in the budget of 2021-22.
Earlier, in 2015, the FDI limit in the insurance sector was increased from 26 to 49 percent. It was done that increasing the FDI limit will help in increasing the scope of insurance in the country. The life insurance premium in the country is equivalent to 3.6 percent of GDP, which is much lower than the global level of 7.13%. In the case of general insurance, the situation is bad. The global average is 2.88 percent, which is only 0.94 percent in India.