FDI reform push: Cabinet clears bill to raise foreign investment in insurance to 100%; key guardrails, LIC changes included
The proposed legislation — the Insurance Laws (Amendment) Bill, 2025 — is among 13 bills listed for the ongoing Winter Session of Parliament, which concludes on December 19.
Sources said the bill may be introduced on Monday.
A Lok Sabha bulletin notes that the draft law seeks to “deepen penetration, accelerate growth and development of the insurance sector and enhance ease of doing business.”Finance Minister Nirmala Sitharaman had proposed the move in this year’s Budget as part of new-generation financial sector reforms.
The insurance industry has so far attracted Rs 82,000 crore in FDI.According to sources, the bill proposes amending the Insurance Act, 1938 to raise the FDI limit to 100 per cent, permit the merger of a non-insurance company with an insurance entity, and establish a dedicated policyholder fund.
It also mandates that at least one senior leader — Chairman, Managing Director or CEO — must be an Indian citizen.
Net worth requirements for insurers have been retained.As part of the wider legislative exercise, amendments will also be made to the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999.
Changes to the LIC Act include empowering its board to independently take operational decisions such as branch expansion and recruitment.The proposed amendment, sources said, aims to promote policyholders’ interests, enhance financial security, and support the entry of more players into the sector while boosting growth and employment.
The government has positioned these reforms as essential for achieving ‘Insurance for All by 2047.’Commenting on the move, Aditya Birla Sun Life Insurance MD and CEO Kamlesh Rao said the step may encourage more global players to consider India, adding that scale will depend on their ability to navigate the local distribution landscape.Deloitte India partner Debashish Banerjee told PTI, “Over the past few months, we have seen growing interest from several global insurers who are actively evaluating India as a long-term market, and greater clarity on ownership norms will help in moving those conversations forward.”Grant Thornton Bharat partner Narendra Ganpule noted that the proposal is designed “with the policyholders in mind, fostering an environment that delivers more choice, encourages highly innovative products, ensures robustly competitive prices, and hopefully delivers better service standards.”RenewBuy CEO Balachander Sekhar said the shift to 100 per cent FDI will bring global capital and expertise into the fold.
