The Union Cabinet on Friday approved a bill to increase foreign direct investment (FDI) in the insurance sector to 100 per cent. The bill is likely to be introduced in the ongoing Winter Session of Parliament, which is scheduled to conclude on December 19. On December 12, the Union Cabinet chaired by Prime Minister Narendra Modi approved a bill to increase the FDI cap from the existing 74 per cent.
As per a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill, 2025 is among the 13 legislations listed for discussion in the session. The bill aims to deepen insurance penetration, accelerate the sector’s growth, and improve the ease of doing business.
Finance Minister Nirmala Sitharaman had earlier proposed raising the FDI limit from the current 74 per cent to 100 per cent in her Budget speech this year, calling it a key part of next-generation financial sector reforms. So far, India’s insurance sector has attracted around ₹82,000 crore in foreign direct investment.
The Ministry of Finance has proposed several changes to the Insurance Act, 1938, including increasing the FDI limit to 100 per cent, reducing the paid-up capital requirement, and introducing a composite licence that would allow insurers to undertake multiple classes of business.
In addition to the Insurance Act, amendments are also planned for the Life Insurance Corporation Act, 1956, and the Insurance Regulatory and Development Authority Act, 1999. Changes to the LIC Act aim to empower the corporation’s board to take key operational decisions, including branch expansion and recruitment.
Officials said the proposed amendments are designed to strengthen policyholder protection, improve financial security, and open the sector to more players—encouraging competition, innovation, and job creation.
The government believes that these reforms will enhance efficiency, support ease of doing business, and significantly increase insurance penetration across the country, helping achieve the national goal of ‘Insurance for All by 2047.’
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