Sitharaman tells Canadian insurers that 100 percent FDI is now on the table

Finance Minister Nirmala Sitharaman used a Toronto swing this week to tell Canadian insurers and pension funds that India will now let them own an insurance company outright. The foreign direct investment cap in the sector has moved from 74 percent to 100 percent. She put that change next to the government's target of insurance cover for every resident by 2047.

She met Kevin D. Strain, president and chief executive of Sun Life Financial, in Toronto on Wednesday. Sun Life already sells insurance and runs funds in India. Sitharaman asked the firm to go further into asset management, alternatives and infrastructure, including through GIFT City, the international financial centre in Gujarat. The finance ministry posted a summary of the meeting and listed India's growth rate, market size and digital public infrastructure as the reasons a long-term investor should add exposure.

The same trip included sessions with the Canada Pension Plan Investment Board, the Ontario Teachers' Pension Plan and OMERS. Those three names manage hundreds of billions of dollars for public servants and teachers. They already hold Indian roads, ports and renewable assets. What is new is the legal room in insurance and the pitch that GIFT City can serve as a booking centre for regional work, not only as a domestic sideline. Private credit, the minister said, is another product the Gujarat centre can clear.

At a reception with Indian-origin business people in Toronto she widened the list. Semiconductors, magnets and rare earths, she said, are open for Canadian capital. India can offer a second supply route for countries that want to buy those materials somewhere other than a single dominant producer. She invited Canadian rare-earth operators to look at Indian projects rather than only at offtake from existing mines. She also named fintech as a field where Canadian banks and regulators could work with Indian systems that already clear payments at national scale.

The political weather around the visit is colder than the investment language. Washington and Ottawa are in a trade fight that now includes an American order to rename Lake Ontario on US federal maps. Canada has also just announced a C$504 million programme to hire 48 researchers away from Harvard, MIT, Stanford, Yale and other American campuses, the first slice of a C$1.7 billion talent plan. Sitharaman's meetings sit in that climate. New Delhi wants Canadian pensions even while the North American argument runs.

India and Canada have also reopened talks on a bilateral investment treaty, according to reports published on Friday. That document, if it is signed, would give the pension funds a legal path for disputes that they do not have today. Sitharaman did not announce a text. She announced a sales pitch and a cap that has already changed in Indian law.

Whether the 100 percent cap produces actual cheques depends on pricing, on how the Insurance Regulatory and Development Authority writes the ownership rules, and on whether Canadian boards accept India risk at current valuations. Sun Life's existing Indian businesses give it a shorter path than a newcomer. CPPIB and OTPP have spent years on infrastructure. Insurance equity is a different book. It needs a multi-decade view of mortality, interest rates and household savings in a country that still buys less cover than the 2047 slogan implies.

Household insurance penetration in India remains low by the standards of the funds Sitharaman is courting. Life policies are common in urban salaried homes. Health, property and small-business cover are thinner. The 2047 target is a political sentence. Filling it requires agents, hospital networks, claims systems and capital that can sit for 20 years. That is the product the Canadians sell at home. The minister's claim is that the ownership cap was the barrier and that the barrier is gone.

The Canadian funds will now test that claim in term sheets, not in reception halls. If Strain's board adds capital to the Indian insurance book, the trip will have done what it was designed to do. If the pensions stay in roads and stay out of underwriting, the 100 percent figure will remain a line in a speech.