Government proposes to introduce bill to raise FDI in insurance sector to 100% in upcoming Parliament session
With an aim to boost foreign direct investment (FDI) in the insurance sector, the government has proposed to introduce a bill to raise FDI in the sector to 100 per cent in the upcoming Winter session of Parliament. The Winter session of Parliament is slated to begin on December 1 and continue till December 19. According to a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill 2025 is part of the 10 legislations listed for the upcoming session of the Parliament. The bill seeks to deepen penetration, accelerate growth and development of the insurance sector and enhance ease of doing business. So far, India’s insurance sector has attracted investments worth Rs 82,000 crore through FDI.
Finance Minister Nirmala Sitharaman in this year's Budget speech had proposed to raise the foreign investment limit to 100 per cent from the existing 74 per cent in the insurance sector as part of new-generation financial sector reforms. Along with raising FDI limit, the finance ministry has proposed amending various provisions of the Insurance Act, 1938, which includes reducing paid-up capital, and introducing a composite licence. The Insurance Act of 1938 serves as the principal Act to provide the legislative framework for insurance in India. It provides the framework for the functioning of insurance businesses and regulates the relationships among insurers, their policyholders, shareholders, and the regulator, IRDAI.
As part of a comprehensive legislative exercise, the Life Insurance Corporation (LIC) Act 1956 and the Insurance Regulatory and Development Authority Act 1999 will be amended, alongside the Insurance Act 1938. The amendments to the LIC Act propose empowering its board to take operational decisions, such as branch expansion and recruitment. The proposed amendment primarily focuses on promoting policyholders' interests, enhancing their financial security, and facilitating the entry of additional players into the insurance market, thereby driving economic growth and employment generation. The changes will help enhance the efficiency of the insurance industry, enabling ease of doing business and enhancing insurance penetration to achieve the goal of 'Insurance for All by 2047'.
