Nirmala Sitharaman, the finance minister (FM) of India, will present the Union Budget to the Parliament on February 1, 2023. Considering the perspective of the Insurance industry, there are a number of expectations for the 2023 budget. India’s insurance market, which was valued at $131 billion as of FY22 and is ranked 11th in the world, got introduced to a powerful risk management tool called Surety Bonds recently. The insurance industry expects government backing to propel the economy further ahead. Let us get a foresight on this from Surety Seven experts.

Upcoming Budget 2023 & Surety Bonds forecast by Surety 007 experts to benefit businesses & Indian economy.

Boosting Insurance Penetration: Key Focus of Budget 2023

Insurance penetration is vital for developing economies like India because it helps to mitigate the financial risks faced by individuals and businesses. In case of surety bonds as bank guarantees availability has become difficult due to overexposure of banks to infrastructure risks & high capital requirements, the Indian development pace has slowed down. Increased penetration of surety bonds would not only lighten the shoulders of banks but inject liquidity into the market, increasing market activity, growth & even employment. The macro-effect would take Indian economy forward; while the trickle-down effect would allow even individuals to enjoy the fruits of surety bond insurance penetration. 

Ease of doing business for Surety bonds Providers in budget 2023

Surety Seven, India’s first surety-tech company, knows the importance of insurance penetration & expects government to ease capital requirement to conduct Surety bonds insurance business in India. The government may ease the minimum capital requirement of ₹100 crore, making it easy for companies to start an insurance or Surety focused business. We are also anticipating the implementation of a composite license & introduction of a variety of surety bond products. This would fuel surety bond insurance penetration, directly contributing to India’s infrastructure growth.

Tax benefits for SME

Surety Bonds would particularly ease cash strapped SMEs. Freed up capital by use of surety bonds would inject life into this slowing down market segment that is loosing momentum. In the upcoming Budget, the government should look at offering GST/other tax concessions to small and medium-sized businesses that opt for surety bonds. This will further boost and motivate SMEs to work for turnkey projects, where big companies have become monopolies due to cash requirements in form of collateral/EMD. This will have direct impact on competition and better utilization of available economic resources, which in turn influences the country’s GDP.

Surety Bonds Market Diversification in Budget 2023

To double the penetration of insurance across the nation, the sector needs to infuse about Rs 50,000 crore of capital annually. This might be accomplished in large part through the introduction of more products relating to surety bonds, where there is a substantial market opportunity. This market opportunity is about $6 Billion in Gross Written Premium. The government should promote this idea as well, because it will be advantageous to both the insurance business and policyholders. Customers will have the choice to purchase numerous surety bond policies from the same insurer, providing insurers with the essential economies of scale that will reduce the cost of distribution, which accounts for 40% to 50% of premiums and is one of the key operational expenses for the insurance industry. This will also relieve policyholders of having to keep track of endless paperwork and renewal dates.


From the surety bond perspective, there are many expectations from the upcoming budget. Overall, the upcoming budget could play a significant role in promoting the growth and development of the recently launched surety bond insurance market in India, by providing the necessary support and incentives for the market to flourish. This in turn will benefit Indian businesses and the Indian economy as a whole : by allocating more funds for infrastructure projects, supporting SMEs to secure financing and contracting for projects via surety bonds, leading to overall economic growth.

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