FDI In Insurance Sector Bill Introduced In Lok Sabha

• FDI in insurance sector Bill faces opposition protest in Lok Sabha
• FDI in insurance sector Bill proposes 100 per cent foreign investment

The FDI in insurance sector Bill was introduced in the Lok Sabha on Tuesday amid strong protests from Opposition parties. The Bill seeks to raise Foreign Direct Investment in the insurance sector to 100 per cent from the existing 74 per cent. The proposed law triggered objections at the introduction stage, with several Opposition members opposing both its content and intent.

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The Bill, titled the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025, proposes amendments to the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. According to the draft circulated to Members of Parliament, the amendments aim to reshape the regulatory framework governing the insurance sector.

Introducing the Bill, Union Finance Minister Nirmala Sitharaman said the common people’s insurance has always been the focus of Prime Minister Narendra Modi. She said the central government provided insurance to marginal sections of society even during the Covid pandemic. Sitharaman also said objections raised by Opposition members could be discussed during the debate. She added that she was ready to answer all questions during the discussion on the proposed legislation.

FDI in insurance sector Bill draws sharp criticism from Opposition

However, Opposition members strongly objected to the introduction of the Bill. RSP member N K Premachandran said the nomenclature of the Bill has nothing to do with its contents. He also opposed the proposal to allow 100 per cent FDI in the insurance sector. DMK member T Sumathy also strongly opposed the move to raise foreign investment limits in the sector.

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TMC member Saugata Roy criticised the naming of the Bill. He said the name looks like the slogans of the ruling coalition and should not be part of any legislation. He also said allowing 100 per cent FDI would be a backward step for the insurance sector. Despite the objections, the government proceeded with the introduction of the Bill.

According to the draft Bill, the proposed amendment will raise the FDI limit in the insurance sector from 74 per cent to 100 per cent. However, it includes a condition that one of the top officials, either the Chairman, Managing Director, or CEO, must be an Indian citizen. The Bill also allows the merger of a non insurance company with an insurance company.

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The Bill received approval from the Union Cabinet on Friday, which cleared the way for its introduction in Parliament. As per the statement of objects and reasons, the Bill aims to accelerate growth in the insurance sector and ensure better protection of policyholders. It also proposes the establishment of a Policyholders’ Education and Protection Fund.

The Bill further seeks to improve ease of doing business for insurance companies and intermediaries. It also aims to bring transparency to regulation making and enhance regulatory oversight. The proposed changes include a five year term for the Chairperson and whole time members or until they reach 65 years of age, whichever is earlier. At present, the upper age limit for whole time members is 62 years.

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In her Budget speech this year, Sitharaman proposed raising the FDI limit to 100 per cent as part of new generation financial sector reforms. So far, the insurance sector has attracted Rs 82,000 crore through FDI. The proposed amendments to the LIC Act also seek to empower its board to take operational decisions such as branch expansion and recruitment.

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