Finance Minister Nirmala Sitharaman on Tuesday introduced the Insurance Amendment Bill, 2025 in the Lok Sabha, signalling a significant shift in India’s insurance policy framework and opening the door for deeper foreign participation in the sector.
Titled The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, the proposed legislation seeks to raise the foreign direct investment (FDI) limit in insurance companies to 100 per cent from the existing cap of 74 per cent. The government has positioned the move as a key reform aimed at attracting long-term global capital and strengthening the financial stability of insurers.
According to official sources, allowing full foreign ownership is expected to increase competition in the insurance market, encourage innovation in products, and improve service standards for policyholders. The government also hopes the reform will help expand insurance penetration in India, which remains significantly below global averages.
At present, life insurance penetration in India stands at around 3 per cent, while general insurance coverage is close to 1 per cent. Policymakers believe higher foreign investment will enable insurers to widen outreach, especially in underserved and rural areas, and introduce more affordable and customised insurance products.
The proposal forms part of the broader financial sector reforms outlined by Sitharaman in the Union Budget, where the government emphasised modernising regulatory frameworks to support economic growth. Since liberalisation began, India’s insurance sector has attracted nearly ₹82,000 crore in foreign investment, and officials expect the revised FDI cap to unlock substantially higher inflows in the coming years.
The bill will now be taken up for detailed discussion and scrutiny in Parliament before being put to a vote.
Originally published on 24×7-news.com.
