Cabinet approves bill to increase FDI in insurance sector to 100%, what does it mean?

News Topical, Digital Desk : The Union Cabinet on Friday approved a bill to increase the foreign direct investment (FDI) limit in the insurance sector from 74 percent to 100 percent, sources said. Sources say the bill could be introduced in the current winter session of Parliament, which is scheduled to run until December 19th. According to the Lok Sabha bulletin, the Insurance Laws (Amendment) Bill, 2025, has been included in the agenda for the upcoming session of Parliament. Its objective is to expand the insurance sector, accelerate growth, and improve ease of doing business. Finance Minister Nirmala Sitharaman proposed increasing the foreign investment limit in the insurance sector to 100 percent while presenting the Union Budget for the financial year 2025-26. So far, foreign investment worth ₹82,000 crore has come into the sector. The Finance Ministry has proposed amending several provisions of the Insurance Act, 1938. These include raising the FDI limit in the insurance sector to 100 percent, reducing the minimum paid-up capital, and introducing a system of joint insurance licenses. As part of a comprehensive legislative process, amendments will also be made to the Life Insurance Corporation of India (LIC) Act, 1956, and the Insurance Regulatory and Development Authority (IRDA) Act, 1999. The proposed changes to the LIC Act aim to give its Board of Directors greater authority over operational decisions such as branch expansion and new appointments. The proposed amendments to the Insurance Bill primarily focus on strengthening the interests of policyholders, enhancing their financial security, and facilitating the entry of more companies into the insurance market.
This will accelerate economic growth and contribute to job creation. These changes will help increase efficiency in the insurance industry, improve ease of doing business, and expand insurance penetration. The government aims to achieve "insurance for every citizen" by 2047. The Insurance Act, 1938, is the basic law governing the insurance business in India. It regulates the operations of insurance companies and the relationship between insurers, policyholders, shareholders and the insurance regulator IRDA.

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