India Moves to Allow 100% FDI in Insurance Sector with New Bill
Government introduces bill in Lok Sabha to raise FDI limit in insurance sector from 74% to 100% amid Opposition protests.
The Union Government on Tuesday introduced a key legislative proposal in the Lok Sabha to raise foreign direct investment (FDI) in the insurance sector from 74 per cent to 100 per cent. Titled the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, the bill seeks to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the IRDAI Act, 1999. The move aims to overhaul India’s insurance framework and attract higher global capital inflows.
Introducing the bill, Union Finance Minister Nirmala Sitharaman said expanding insurance coverage for common citizens has been a priority of the Modi government. She highlighted that insurance protection was extended even to marginalised sections during the Covid-19 pandemic. Sitharaman added that objections raised by Opposition members would be addressed in detail during the debate on the legislation.
The bill, however, faced strong resistance from Opposition parties. RSP MP N K Premachandran opposed its introduction, arguing that the bill’s title did not reflect its actual content and strongly objected to the proposal for 100 per cent FDI. DMK member T Sumathy and TMC MP Saugata Roy also criticised the move, with Roy calling it a backward step and questioning the use of slogan-like names for legislation.
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According to the draft bill, while foreign investors may be allowed full ownership, key leadership positions such as Chairman, Managing Director, or CEO must be held by Indian citizens. The bill also permits the merger of non-insurance companies with insurance firms and aims to improve regulatory clarity, transparency, and ease of doing business across the sector.
The legislation further proposes the creation of a Policyholders’ Education and Protection Fund to safeguard consumer interests and enhance financial literacy. It also seeks to strengthen regulatory oversight and streamline rule-making processes, ensuring better protection for policyholders while supporting sectoral growth.
The bill, which received Union Cabinet approval last week, builds on Sitharaman’s Budget announcement proposing new-generation financial sector reforms. With the insurance sector having already attracted around ₹82,000 crore in FDI, the proposed amendments are expected to promote competition, boost employment, and accelerate economic growth, while empowering the LIC board with greater operational autonomy.
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