Budget 2025: Insurance stocks LIC, ICICI Lombard trade higher after FM announces 100% FDI in insurance sector

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Budget 2025: Insurance stocks LIC India, ICICI Lombard General Insurance Company and New India Assurance Company traded with decent gains in intraday trade on Saturday, February 1, after Finance Minister Nirmala Sitharaman announced increasing the FDI limit to 100 per cent in the insurance sector. Stocks such as ICICI Prudential Life Insurance Company, HDFC Life Insurance Company and SBI Life Insurance Company also witnessed healthy gains during the session.

The Union government raised the foreign direct investment (FDI) limit for the insurance sector from 74 per cent to 100 per cent. Finance Minister Nirmala Sitharaman made the announcement while presenting the Union Budget 2025 in Parliament on Saturday, February 1.

Industry players hailed the move, terming it a step that could potentially expand India’s insurance coverage by attracting global capital and expertise. 

“The 100 per cent FDI allowance in insurance is a welcome move that will attract global capital, enhance competitiveness and efficiencies, and help expand insurance coverage in India where penetration remains below 5 per cent,” said Anand Roy, MD & CEO, Star Health & Allied Insurance Co. Ltd.

Roy added that the budgetary proposal aligns with IRDAI’s vision of ‘Insurance for All by 2047’and demonstrates the government’s commitment to financial inclusion.

What experts say

“The Finance Minister announced an increase in the foreign direct investment (FDI) limit for the insurance sector from the current 74 per cent to 100 per cent. This decision to permit 100 per cent FDI in the insurance sector represents a significant change in India’s financial landscape,” Abhishek Pandya, a research analyst at Stoxbox, noted. 

“The new proposal is expected to attract more global insurers, enhance competition, and introduce new market entrants. It will bring in essential capital, improve competition, and increase insurance penetration. Overall, this decision is a major positive development for the entire insurance sector,” Pandya said.

Raj Gaikar, a research analyst at SAMCO Securities, underscored that the decision to raise the FDI limit in the insurance sector is expected to benefit the insurance industry by attracting global players to the domestic market. 

“This increased participation could lead to higher competition and improved insurance penetration. As the overall insurance market expands, both insurers and policyholders stand to gain, insurers from a larger customer base and policyholders from enhanced product offerings and competitive pricing,” said Gaikar.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.

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