FDI in India's insurance sector might be hiked to 100%
What's the story
The Indian government plans to introduce a bill in the upcoming Winter Session of Parliament, seeking to raise foreign direct investment (FDI) in the insurance sector to 100%. The session will be held from December 1-19 and will have 15 working days. The proposed legislation, called the Insurance Laws (Amendment) Bill 2025, is one of the 10 bills scheduled for discussion during this period.
bLegislative goals
Bill aims to boost insurance sector growth
The Insurance Laws (Amendment) Bill 2025, aims to deepen the penetration, accelerate growth and development of the insurance sector. It also seeks to enhance ease of doing business. Finance Minister Nirmala Sitharaman had proposed raising the foreign investment limit in this sector from 74% to 100% in her Budget speech this year, as part of new-generation financial sector reforms.
Regulatory changes
Proposed amendments to the Insurance Act, 1938
The Finance Ministry has proposed several amendments to the Insurance Act, 1938. These include raising FDI in the insurance sector to 100%, lowering paid-up capital, and also introducing a composite license. The Life Insurance Corporation Act of 1956 and the Insurance Regulatory and Development Authority Act of 1999 will also be amended as part of this comprehensive legislative exercise.
Board empowerment
Proposed changes to empower LIC's board
The proposed amendments to the LIC Act mainly focus on empowering its board to take operational decisions like branch expansion and recruitment. The main objective of these changes is to promote policyholders' interests, enhance their financial security, and facilitate the entry of more players into the insurance market. This is expected to drive economic growth and generate employment opportunities in India.