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India is seeking a valuation of between Rs 8 trillion ($109 billion) and Rs 10 trillion for the state-backed Life Insurance Corporation in what's slated to be the nation's biggest initial public offering, Bloomberg reported.

The government is considering selling a 5-10 per cent stake in the company, which could raise between Rs 400 billion and Rs 1 trillion, according to the people with knowledge of the matter, who asked not to be identified as the matter is private.

The potential valuation is based on preliminary talks and may change after further discussions, due diligence and an official valuation report, the report said.

The valuation is much lower than Jefferies' estimate of Rs 19 trillion but in line with others including RBSA Advisors' of about Rs 10 trillion to Rs 11.6 trillion.

Prime Minister Narendra Modi's government is pushing ahead with LIC's IPO to help plug a widening budget gap as it aims to raise Rs 1.75 trillion by March through divestments. The LIC sale is key to the government achieving this target. India may also allow foreign direct investment in the insurer to ensure diversified and strong demand across investors.