Context:
While presenting the Union Budget 2025-26, Nirmala Sitharaman, the Union Finance Minister, declared crucial reforms in the financial sector for boosting investment, smoothening regulations, and global competitiveness during the next five years.
Key Announcements
Increased FDI Limit in Insurance
- FDI in the insurance sector limit increased to 100% from 74%. –
Only to companies that invest their entire premium within India. –
Existing guardrails and conditions for foreign investment will be streamlined.
Pension Sector Reforms
- A regulatory coordination forum will be created to help in designing and expanding pension products.
Simplification of KYC (Know Your Customer)
- Introduction of Overhauled Central KYC Registry by 2025.
- A more streamlined periodic system for KYC updates would cut down the burden of compliance.
Simplified Merging Process for Companies
- Simplification and rationalization of requirements and procedures for quick merger approvals.
- Expanding fast-track mergers will be simplified further, making the procedure easier for companies.
Bilateral Investment Treaties to be overhauled
- BIT model would be reshuffled so as to be more investor-friendly. This move is aimed at boosting sustained foreign investment while being aligned to the “First Develop India” vision.
Conclusion
They relate to sector reforms in finance aimed at luring investment and streamlining compliance while enhancing Indian competitiveness through a liberalizing world economy, thus accelerating further growth and better financial stability via liberalization in the insurance sector, streamlined merger rules, and updating investment treaties.
