The Union Cabinet has cleared a bill to increase FDI in the insurance sector to 100 per cent, marking a significant reform push. The proposal, expected to be tabled in the Winter Session, is aimed at boosting industry growth and expanding insurance coverage nationwide.
The Union Cabinet on Friday approved a bill that proposes raising Foreign Direct Investment (FDI) in the insurance sector to 100 per cent, news agency PTI reported citing sources. The government is likely to table this bill during the ongoing Winter Session of Parliament, which ends on December 19. As per a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill 2025 is among the 13 key legislations scheduled for discussion. The bill aims to expand insurance penetration, accelerate sectoral development and make business operations smoother.
FDI boost announced earlier in the budget
Union Finance Minister Nirmala Sitharaman had already signalled this shift in the latest Union Budget, where she proposed increasing the FDI limit from 74 per cent to 100 per cent as part of next phase financial sector reforms. The insurance sector has so far received foreign investment worth Rs 82,000 crore. Officials say the proposed changes will help attract more global players and capital into the Indian market.
Government plans wide-ranging amendments
The finance ministry has put forward amendments to several provisions of the Insurance Act of 1938. These include full foreign ownership, reduced paid-up capital requirements and the introduction of composite licences. As part of a broader legislative overhaul, amendments are also planned in the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999.
The proposed amendments to the LIC Act aim to give the insurer’s board more autonomy in operational decisions like branch expansion and recruitment. The government believes these revisions will reinforce policyholder protections, boost financial security and create space for more competition that can strengthen economic growth and employment.
Push toward insurance for all by 2047
The changes are intended to improve efficiency across the insurance value chain, simplify business operations and drive expansion to meet the national goal of achieving Insurance for All by 2047. The Insurance Act of 1938 continues to be the core legislation governing the insurance ecosystem and defines the relationship between insurers, policyholders, shareholders and the regulator, Insurance Regulatory and Development Authority of India (IRDAI).
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