Rajya Sabha Approves Bill to Increase FDI in Insurance Sector to 100%

The Rajya Sabha has approved a landmark bill that raises the foreign direct investment limit in the insurance sector from 74% to 100%. This legislative change aims to attract more foreign capital, enhance competition, and potentially lower insurance premiums. Additionally, the Lok Sabha passed a bill to open the nuclear sector to private operators, despite opposition calls for further scrutiny. These developments signal a significant shift in India's approach to foreign investment in critical sectors, with implications for job creation and market dynamics. Read on for more details about these pivotal legislative changes.

By Narendra Chaudhary Dec 18, 2025, 12:17 IST

Legislative Changes in the Insurance Sector

On Wednesday, the Rajya Sabha approved a significant bill aimed at raising the limit for foreign direct investment (FDI) in the insurance sector from 74% to a full 100%.

The 2025 Sabka Bima Sabki Raksha Amendment of Insurance Laws Bill had already been passed by the Lok Sabha a day earlier. This legislation seeks to amend several key acts, including the 1938 Insurance Act, the 1956 Life Insurance Corporation Act, and the 1999 Insurance Regulatory and Development Authority Act.

Among its provisions, the bill facilitates the merger of non-insurance entities with insurance companies and establishes a Policyholders’ Education and Protection Fund to safeguard policyholders' interests.

During the debate, Union Finance Minister Nirmala Sitharaman emphasized that these amendments would attract more capital from foreign firms into the insurance sector, as reported by a news agency.

Sitharaman noted that the liberalization of the sector has already contributed to greater insurance penetration in India, with potential for further growth. She also mentioned that this move could generate additional employment opportunities.

The BJP leader highlighted that increasing the FDI cap would encourage more foreign companies to enter the Indian market, addressing the challenges many face in finding local partners.

With the influx of new companies, competition is expected to rise, which could lead to lower insurance premiums, according to Sitharaman.

In response to opposition claims that the government rushed the bill, the minister clarified that discussions had been ongoing for nearly two years.

Congress MP Shaktisinh Gohil opposed the bill, recalling that prominent BJP figures, including the late Sushma Swaraj and Arun Jaitley, had previously opposed increasing FDI in insurance. He also pointed out that the BJP's 2014 election manifesto had promised to restrict foreign investment in this sector.

Trinamool Congress MP Saket Gokhale expressed concerns that private insurers would shy away from the rural market, which is characterized by low premiums and high risks, especially where government insurance schemes are in place.

Gokhale warned that the entry of foreign players could disrupt existing government schemes, as the profits of the state-owned Life Insurance Corporation are largely derived from its substantial market share, while private firms might resort to aggressive pricing strategies.

Opposition members also voiced their discontent regarding the use of Hindi terminology in the bill's title.

A proposal from the opposition to refer the bill to a parliamentary committee was dismissed.

Nuclear Energy Bill Passed in Lok Sabha

On the same day, the Lok Sabha passed the 2025 Sustainable Harnessing and Advancement of Nuclear Energy for Transforming India Bill, which aims to allow private operators into the nuclear sector.

This bill was approved despite calls from various opposition parties to send it to a parliamentary committee for further scrutiny.

Before receiving presidential assent, the bill must also be approved by the Rajya Sabha.

The proposed legislation seeks to grant licenses to private entities, joint ventures, and government companies for the construction, ownership, operation, or decommissioning of nuclear power plants or reactors.

Additionally, it aims to amend the 2010 Civil Liability for Nuclear Damage Act by removing a clause that permits nuclear plant operators to seek recourse from suppliers if their equipment is implicated in an accident.

Other provisions include adjustments to the compensation levels that operators must pay in the event of accidents.

The bill is designed to stimulate investment in the nuclear power sector, helping India reach its goal of achieving 100 gigawatts of nuclear power capacity by 2047.

During the debate, Congress MP Manish Tewari questioned whether the timing of the bill's introduction was coincidental, given the interest expressed by a major conglomerate in entering the nuclear sector.

Samajwadi Party MP Aditya Yadav criticized the government for prioritizing private sector involvement over public interest, especially in light of economic challenges.