Budget 2025: FDI limit for insurance raised to 100%, KYC, merger rules eased

Union Finance & Corporate Affairs Minister Nirmala Sitharaman, presenting the Union Budget 2025-26 in Parliament today, said the FDI limit for the insurance sector will be raised from 74 to 100%. This enhanced limit will be available for those companies which invest the entire premium in India.

The FM says the current budget aims to initiate transformative reforms across six domains, which will augment our growth potential and global competitiveness during the next five years. One of these domains is the financial sector, she says, which include sectors like insurance, pensions, bilateral investment treaties (BIT) and so forth.

FDI in Insurance Sector

Nirmala Sitharaman says the FDI limit for the insurance sector will be raised for the companies investing the "entire premium" in the country. "The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified," says the FM.

Reacting to the Budget 2025-26, Gayathri Parthasarathy, Partner and Leader – Financial Services, PwC India, says the Union Budget takes the right step forward towards ‘Viksit Bharat’ as it looks to bolster development and growth. "The various measures announced by the Honourable Finance Minister will enable quality credit growth, insurance penetration through FDI, boost both manufacturing and consumption and take the economy and ecology forward."

Pension Sector

The Finance Minister says a forum for regulatory coordination and development of pension products will be set up.

KYC Simplification

To implement the earlier announcement on simplifying the KYC process, the revamped central KYC registry will be rolled out in 2025, Sitharaman says. A streamlined system for periodic updating will also be implemented.

Merger of Companies

The Union Finance Minister also says that requirements and procedures for speedy approval of company mergers will be rationalised. The scope for fast-track mergers will also be widened and the process will be made simpler.

Bilateral Investment Treaties

To encourage sustained foreign investment and in the spirit of ‘first develop India’, the current model BIT will be revamped and made more investor-friendly, the FM adds.