FM Sitharaman introduces insurance amendment bill in Lok Sabha to hike FDI in sector to 100%

FM Sitharaman introduces insurance amendment bill in Lok Sabha to hike FDI in sector to 100%

Finance Minister Nirmala Sitharaman on December 16 introduced a bill in Lok Sabha to raise FDI in the insurance sector to 100%, with a view to providing insurance to all by 2047.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, seeks to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999, according to the Bill circulated to members of Parliament ahead of its introduction in Parliament.

The amendment will raise the Foreign Direct Investment limit in the insurance sector from 74% to 100%, it said.

Last week, the Union Cabinet, chaired by Prime Minister Narendra Modi, cleared the Bill for introduction in Parliament during the Winter Session. The amendment is aimed at attracting stable long-term investment, facilitating technology transfer, and helping deepen insurance penetration in line with the government’s goal of “Insurance for All by 2047.”

By lifting the FDI cap, the government is looking to draw substantial long-term foreign capital into the sector.

Officials said the move will help insurers strengthen their balance sheets, improve solvency levels, and expand coverage in a country where insurance penetration remains low.

Full foreign ownership is also expected to sharpen competition, improve product innovation, and potentially lower costs for policyholders, according to the government.

Despite the Bill to hike FDI in the insurance sector to 100%, one of the top officials — Chairman, Managing Director, or CEO — must be an Indian citizen.

It also paves the way for the merger of a non-insurance company with an insurance company.

So far, the insurance sector has attracted Rs 82,000 crore through foreign direct investment (FDI).

The Bill further aims to accelerate the growth and development of the insurance sector and to ensure better protection of policyholders, as per the statement of objects and reasons.

The Bill provides for the establishment of the Policyholders' Education and Protection Fund to protect policyholders' interests.

It would also improve the ease of doing business for insurance companies, intermediaries, and other stakeholders, bring transparency to regulation-making, and enhance regulatory oversight over the sector, it said.