Union Cabinet Clears Bill Raising FDI Limit To 100% in Insurance Sector: Report
New Delhi: The Union cabinet on Friday approved the Insurance Laws (Amendment) Bill, which aims to remove limits on foreign direct investment (FDI) in insurance firms. This limit which was at 74% is now at 100%, according to a report by The Hindu BusinessLine.
Through the bill, existing guardrails and conditionalities associated with foreign investment will be reviewed and simplified, according to the report.
As per the Lok Sabha bulletin, the bill, officially called the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, aims “to deepen penetration, accelerate growth and development of the insurance sector and enhance ease of doing business”. According to BusinessLine, countries such as Canada, Brazil, Australia and China permit 100% FDI in their insurance sectors.
According to a report by The New Indian Express, India doing this too could “draw substantial foreign capital, increase competition, and improve customer services across India’s insurance market”. The idea is that it will help achieve the goal of ‘Insurance for All by 2047’.
India has about 70 insurers. However, there are nearly 10,000 insurers globally, and even a small percentage of these choosing to enter India will bring in huge capital.
The Indian Express quoted Sharad Mathur, MD and CEO, Universal Sompo General Insurance, as saying that increasing the FDI limit to 100% would serve as a strong catalyst for the insurance sector as it would enable great capital inflows that will help insurers “expand their business, strengthen balance sheets, and invest in advanced risk-assessment models and more efficient claims-management systems”.
The bill, while proposing “sweeping changes” to the Insurance Act, 1938, will also bring reforms to the Life Insurance Corporation Act, 1956, and the (Insurance Regulatory and Development Authority of India) IRDAI Act, 1999, “with the stated aim of modernisation, wider coverage and stronger regulatory oversight”.
For instance, it will empower the IRDAI, a statutory body under the Ministry of Finance, to specify lower entry capital (not less than Rs 50 crore) for under-served segments on special-case basis, while the requirement of ‘net owned funds’ for foreign re-insurers is proposed to be lowered to Rs 1,000 crore from Rs 5,000 crore, BusinessLine reported.
Proposed by MP Bharti Pardhi, the bill aims to amend The Insurance Act, 1938, “with a view to include and regulate the health insurance of the senior citizens in the country”, Pardhi had listed in the statement of reasons for proposing the amendment.
The existing Act “does not address the concerns of the health insurance of the senior citizens” and there is a need “to address the financial burden posed by rising health insurance premiums for senior citizens”, Pardhi had noted in the statement.
“The present Bill seeks to establish a robust monitoring framework through Insurance Regulatory and Development Authority of India (IRDAI) to enforce compliance and issue necessary guidelines to promote equity in healthcare access,” Pardhi’s statement on the bill had said.
The bill, which also introduces several other reforms, is expected to be introduced in Parliament early next week.
The Union cabinet also approved three other bills on Friday, including one permitting the private sector in nuclear energy, one that seeks to rename the Rural Employment Guarantee Scheme as the ‘Pujya Bapu Rural Employment Guarantee Scheme’, and another for a Higher Education Commission.
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