Government introduces Bill in Lok Sabha to hike FDI in insurance sector to 100%

A Bill seeking to raise Foreign Direct Investment (FDI) in the insurance sector to 10% was on Tuesday (December 16) introduced in the Lok Sabha amid strong protest from the Opposition.

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, as per the Bill circulated to members of Parliament.

Introducing the Bill, Union Finance Minister Nirmala Sitharaman said, “The common people’s insurance has always been the focus of Prime Minister Narendra Modi, and the Central government has provided insurance to the marginal sections of society even during the Covid pandemic.”

Ms. Sitharaman said, “Objections of some of the Opposition members could be part of the debate, and she was ready to answer all their questions during the debate on the proposed legislation.”

Opposing the introduction of the Bill, RSP member N.K. Premachandran said, “The nomenclature of the Bill has nothing to do with its contents.” He also opposed the proposal to allow 100% FDI in the insurance sector.

DMK member T. Sumathy, too, strongly opposed 100% FDI in the sector. TMC member Saugata Roy said, “The name of the Bill looks like the slogans of the ruling coalition, and such names should not be part of any Bill.” He said that allowing 100% FDI will be a backward step in the insurance sector.

According to the draft Bill, the amendment will raise the Foreign Direct Investment limit in the insurance sector from 74% to 100%. Though the Bill proposes to hike FDI in the sector, 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. The Bill received the Union Cabinet’s nod on Friday (December 12, 2025), paving the way for its introduction in Parliament. 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.

It 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.

With regard to the term of office of the Chairperson and other whole-time members, the Bill provides for a five-year term or until they attain the age of 65 years, whichever is earlier. At present, the upper age limit for whole-time members is 62 years, while for the Chairman it is 65 years. Ms. Sitharaman, in this year’s Budget speech, proposed to raise the FDI limit to 100% from the existing 74% in the insurance sector as part of new-generation financial sector reforms.

So far, the insurance sector has attracted ₹82,000 crore through FDI. 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.