India on Monday further opened up its insurance sector to foreigners, as the nation seeks to spur investments to give a fillip to an economy battered by the pandemic.

Lawmakers approved a legislation increasing the limit on foreign direct investment in insurance companies to 74% from the present 49%, a limit that was set in March 2015. The decision, passed by both houses of Parliament, sees through a budget proposal aimed at attracting new capital.

The lenient foreign ownership cap will help expand insurance penetration in the country of 1.3 billion people and make long-term funding available for infrastructure development. The move will also help boost valuation of the country’s insurers, as Prime Minister Narendra Modi seeks to take state-run Life Insurance Corp. of India public to arrest a budget deficit that widened to a record due to steps to fight the pandemic.

FDI in insurance would help get more investment and competition in the sector and ease stress for insurance companies, Finance Minister Nirmala Sitharaman said.

Some of the largest investors, including AXA SA, Tokio Marine Holdings Inc., Aegon NV, Nippon Life Insurance Co., Sun Life Financial Inc. and Aviva Plc, have had a presence in the Indian insurance market for years.

The revised ownership limits are subject to safeguards, according to the legislation. These include retaining majority of the company’s board and key management positions with resident Indians and keeping a specified percentage of profits as general reserve.

State-owned insurance companies would continue to have a presence in the sector with government backing, given its strategic nature, Sitharaman said.

India currently has 57 insurance companies, and yet the nation has one of the lowest insurance penetrations in the world at less than 4%. The overall market size of the insurance sector was expected to be $280 billion in 2020, according to India Brand Equity Foundation, a trust set up by the trade ministry.

Photograph: Workers labor on reinforcing steel at a flyover construction site in Patna, Bihar, India, on Thursday, Feb. 25, 2021. After falling into a coronavirus-fueled recession in the third quarter, India’s economy has likely returned to expansion in the three months ended December, according to the median estimate in a Bloomberg survey of economists.

Photograph: Workers labor on reinforcing steel at a flyover construction site in Patna, Bihar, India, on Thursday, Feb. 25, 2021. After falling into a coronavirus-fueled recession in the third quarter, India’s economy has likely returned to expansion in the three months ended December, according to the median estimate in a Bloomberg survey of economists.