The government on Tuesday introduced a bill in the Lok Sabha to raise foreign direct investment (FDI) in the insurance sector to 100 per cent, triggering strong protests from Opposition parties. The proposed 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.
Tabling the bill, Union Finance Minister Nirmala Sitharaman said expanding insurance coverage for the common people has been a priority of Prime Minister Narendra Modi and that the government ensured protection for marginalised sections even during the Covid-19 pandemic. She said the concerns raised by Opposition members would be addressed during the debate on the legislation.
Opposing the introduction, RSP MP N K Premachandran questioned the nomenclature of the bill, saying it did not reflect its contents, and objected to allowing 100 per cent FDI in the sector. DMK member T Sumathy also strongly opposed the proposal, while Trinamool Congress MP Saugata Roy criticised the bill’s title, calling it slogan-like and warning that full foreign ownership would be a setback for the insurance industry.
According to the draft legislation, the FDI cap in the insurance sector will be raised from the existing 74 per cent to 100 per cent. However, it mandates that at least one top executive—such as the chairperson, managing director or CEO—must be an Indian citizen. The bill also allows the merger of a non-insurance company with an insurance firm.
Cleared by the Union Cabinet last week, the bill aims to accelerate the growth of the insurance sector, enhance policyholder protection and improve the ease of doing business. It proposes the creation of a Policyholders’ Education and Protection Fund and seeks to strengthen regulatory oversight while bringing greater transparency to rule-making.
The legislation also revises tenure norms for the Insurance Regulatory and Development Authority of India, providing a five-year term or up to the age of 65 years for its chairperson and whole-time members. Currently, the upper age limit for whole-time members is 62 years.
In her Budget speech earlier this year, Sitharaman announced the plan to raise the FDI limit to 100 per cent as part of new-generation financial sector reforms. The insurance sector has so far attracted around Rs 82,000 crore in foreign investment. The amendments to the LIC Act are aimed at empowering its board to take operational decisions such as branch expansion and recruitment, while facilitating greater competition, economic growth and job creation.
