After nearly a quarter of a century, Bajaj Allianz has split, marking the end of an era. This after the Union Budget announced a landmark move this February—100% foreign direct investment in the insurance sector. The move has generated significant investor interest.
The potential is immense. Insurance penetration in India is below 4% compared to around 15% in developed economies. With a growing population, rising incomes, and expanding middle class, the market is ripe for transformation. New entrants and innovative technologies are fast changing how insurance is sold, ushering in a disruptive era for the industry and hitherto dominant players like LIC. A reduction in the 18% GST on insurance to a more reasonable 5% would further support the sector’s growth and make insurance more accessible to Indians.
The government’s decision to fully open the sector could fundamentally reshape the market. The cover story by Teena Jain Kaushal explores this turning point in detail, focusing on how foreign insurers now have greater flexibility. Several joint ventures are being re-evaluated, with some Indian partners expected to exit in favour of global players, triggering a wave of consolidation and realignment.
Elsewhere in this issue, we bring you the latest BT-C Fore Business Confidence Survey of 500 CEOs and CFOs for the March quarter this year. The index has dipped below 50 for the first time since 2021, with sentiment being rocked by the global trade war initiated by US President Donald Trump. Firms are scaling back capital investment plans with intended capex falling 25.5% for FY26, and over 65% of surveyed businesses delaying new investments despite rate cuts. Will sentiment recover soon? A lot may depend on the way the proposed trade deal with the US pans out.
A new beginning in India’s trade engagement with the world has already been made with the historic trade deal with the UK. As part of this deal, India will reduce tariffs on 90% of British goods over time. In turn, a diverse range of Indian goods and services stand to benefit from easier access to Britain. This deal, the Indian government hopes, will become the gold standard for future trade engagements with partners who are aiming to reduce dependence on China in a de-globalised world.
Meanwhile, just as we go to print, India has struck the terror hub of Pakistan with multiple military strikes targeting terrorist infrastructure at nine locations. Hours later, the benchmark index of the Pakistan stock exchange, the KSE-100, crashed 6,500 points, or 6%, intraday, reflecting the fragile nature of Pakistan’s economy, which by all accounts will not be able to afford a full-fledged war with India. Global ratings agency Moody’s has warned that a persistent increase in tensions could impair Pakistan’s access to external financing and pressure its forex reserves further.
For a nation still dependent on International Monetary Fund loans, the economic fallout of supporting jihad and functioning as the global terror hub is poised to grow even more devastating.
