Insurance Amendment Bill: Cabinet Okays 100% FDI in Sector

As per news report, The Union Cabinet, under the leadership of Prime Minister Narendra Modi, has approved a bill proposing to raise foreign direct investment in insurance firms to 100%.  

The initiative is aimed at strengthening the domestic insurance industry through increased capital inflows and regulatory reforms. 

Cabinet Clears Proposal for 100% FDI in Insurance Sector 

On December 12, 2025, the Cabinet approved the Insurance Laws (Amendment) Bill, 2025, which seeks to allow foreign investors to fully own Indian insurance companies. Until now, the FDI cap in the sector stood at 74%.  

This move aligns with the measures announced earlier in the budget speech by Finance Minister Nirmala Sitharaman. The approval is part of broader structural reforms aimed at improving ease of doing business and driving insurance penetration across India. 

Key Provisions of the Proposed Amendments 

The Insurance Act, 1938, will be amended to incorporate the new 100% FDI cap. In addition, the planned legislative updates include reduced paid-up capital requirements and a new composite licence structure enabling insurers to offer multiple insurance products under one regulatory framework.  

Amendments will also be made to the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. The LIC Act revisions will empower the LIC board to take independent decisions on matters such as new branch openings and recruitment. 

Purpose and Expected Benefits 

The government anticipates that the reforms will bring in more companies into the sector, enhance consumer services, and strengthen policyholder protection.  

So far, ₹82,000 crore in foreign capital has already been invested in the insurance industry. Increasing the FDI cap is expected to attract further global investment, supporting economic activity and job creation in the insurance domain. 

Read More: Labour Ministry Inks MoU with Microsoft to Accelerate Employment Opportunities in India! 

Parliamentary Consideration 

The proposed bill is slated for tabling in the Winter Session of Parliament, scheduled to end on December 19, 2025.  

As per the Lok Sabha bulletin, this bill is among 13 key legislative proposals lined up for discussion. The government’s aim is to enable ‘Insurance for All’ by 2047, marking a significant milestone in its financial inclusion strategy. 

Conclusion 

The Cabinet’s approval of 100% FDI in insurance marks a key reform in India’s financial services landscape. By revising several acts and enabling complete foreign ownership, the government seeks to enhance capital access and insurance accessibility across sectors. 

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