What Does the New Bill Mean for India's Insurance Sector? FDI Limit Raised to 100%

The Indian Parliament has taken a significant step by passing a bill that raises the Foreign Direct Investment (FDI) limit in the insurance sector to 100%. This legislative change is expected to boost insurance penetration, lower premiums, and create numerous job opportunities. Finance Minister Nirmala Sitharaman highlighted the potential for increased foreign investment and competition in the market. The bill also introduces amendments to several key insurance laws and establishes a fund to protect policyholders' interests. Discover how this new legislation could reshape the insurance landscape in India.

By Narendra Chaudhary Dec 17, 2025, 20:02 IST

Parliament Approves Major Changes in Insurance Sector

New Delhi: On Wednesday, the Parliament approved a significant bill that raises the Foreign Direct Investment (FDI) cap in the insurance sector from 74% to a full 100%. This move is anticipated to enhance insurance coverage, reduce premium costs, and create more job opportunities.

The Rajya Sabha passed the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, through a voice vote, following its approval by the Lok Sabha the previous day.

During the session, several amendments proposed by the Opposition were dismissed, including a suggestion to refer the bill to a parliamentary committee for additional examination.

In her response to the debate, Finance Minister Nirmala Sitharaman emphasized that the new amendments would facilitate foreign investment in the insurance sector.

Sitharaman highlighted that the liberalization of this sector has already contributed to increased insurance penetration in India, with potential for further growth.

She noted that raising the FDI limit to 100% would attract more foreign firms to the Indian market, as many struggle to find local partners for joint ventures.

The minister expressed optimism that the influx of new companies would foster competition, leading to lower premiums for consumers.

Addressing concerns regarding employment, Sitharaman assured that the changes would actually create more jobs, citing that employment in the sector has nearly tripled since the FDI cap was raised from 26% to 74%.

She countered claims from the Opposition that the government rushed the bill through Parliament, stating that discussions had been ongoing for nearly two years.

The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Bill, 2025, will amend several key legislations, including the Insurance Act of 1938, the Life Insurance Corporation Act of 1956, and the Insurance Regulatory and Development Authority Act of 1999.

Additionally, it allows for the merger of non-insurance companies with insurance firms.

The bill aims to accelerate the growth of the insurance sector while ensuring better protection for policyholders, as outlined in its objectives.

It also establishes a Policyholders’ Education and Protection Fund to safeguard the interests of policyholders.