Union Budget 2025-26 introduces several financial sector reforms aimed at boosting growth and global competitiveness. The FDI limit for the insurance sector will be increased from 74% to 100%, with conditions ensuring investments are fully directed into India. Additionally, the government will establish a forum to coordinate pension regulation and develop new pension products. A revamped Central KYC Registry is set to launch in 2025 to simplify and streamline the KYC process, making periodic updates easier. The approval process for company mergers will also be rationalized, allowing for faster and simpler procedures, including expanding the scope for fast-track mergers. In line with promoting foreign investments, the government plans to revamp the Bilateral Investment Treaty (BIT) model, making it more investor-friendly while prioritizing India’s development. These initiatives are expected to enhance the financial sector’s efficiency and attract more foreign investments into India.
The government’s decision to increase the FDI limit in the insurance sector to 100% is a pivotal reform that promises to enhance financial inclusion and drive deeper insurance penetration across India. According to Jude Gomes, MD & CEO of Ageas Federal Life Insurance, the move will attract fresh capital, global expertise, and innovation, aligning with the vision of ‘Insurance for All’ by 2047. Ageas Federal, having already benefited from the earlier 74% FDI cap, sees this reform as a significant opportunity to expand its reach, improve operational efficiency, and address evolving customer needs.
Relevant Press Release is as follows:
Ministry of Finance
FDI LIMIT FOR INSURANCE SECTOR RAISED FROM 74 TO 100 PER CENT
FORUM FOR REGULATORY COORDINATION AND DEVELOPMENT OF PENSION PRODUCTS TO BE SET UP: UNION BUDGET 2025-26
ROLL OUT OF REVAMPED CENTRAL KYC REGISTRY PLANNED IN 2025
PROCEDURES FOR SPEEDY APPROVAL OF COMPANY MERGERS TO BE RATIONALIZED, PROCESS TO BE MADE SIMPLER
Posted On: 01 FEB 2025 1:21PM by PIB Delhi
Budget 2025-26 aims to initiate transformative reforms across six domains which will augment our growth potential and global competitiveness during the next five years, the Union Finance & Corporate Affairs Minister said while presenting the Union Budget 2025-26 in the Parliament today.
One of these domains is Financial Sector which encompasses sectors like Insurance, Pensions, Bilateral Investment Treaties (BIT) and so forth.
FDI in Insurance Sector
Smt. Nirmala Sitharaman informed that the FDI limit for the insurance sector will be raised from 74 to 100 per cent. This enhanced limit will be available for those companies which invest the entire premium in India. The current guardrails and conditionalities associated with foreign investment will be reviewed and simplified.
Pension Sector
A forum for regulatory coordination and development of pension products will be set up, the Union Finance Minister stated.
KYC Simplification
To implement the earlier announcement on simplifying the KYC process, the revamped Central KYC Registry will be rolled out in 2025, Smt. Nirmala Sitharaman said. A streamlined system for periodic updating will also be implemented.
Merger of Companies
The Union Finance Minister also said that requirements and procedures for speedy approval of company mergers will be rationalized. 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 Union Finance Minister added.
