The proposed amendments will not be limited to the FDI cap alone.

Cabinet Approves 100% FDI in Insurance Sector: Major Boost for India’s Financial Growth

On Friday, the Union Cabinet approved a bill to raise the foreign direct investment (FDI) limit in the insurance sector to 100 per cent from the existing 74 per cent cap. This is a major policy decision focused on transforming India’s insurance landscape. The move was sanctioned as part of the government’s continuous efforts towards growth, attracting capital and enhancing competitiveness in one of the country’s critical financial services sectors.

The Insurance Laws (Amendment) Bill, 2025, is expected to be introduced in the ongoing Winter Session of Parliament, which is scheduled to conclude on December 19. The bill has been listed among 13 pieces of legislation slated for consideration during the session, highlighting the priority the government has attached to financial sector reforms.

Finance Minister Nirmala Sitharaman first announced the proposal to open up the insurance sector to full foreign ownership in her budget speech this year as part of new-generation financial sector reforms. The objective is to deepen insurance penetration, accelerate sectoral growth, improve the ease of doing business and bring in global best practices.

India’s insurance industry has so far attracted around INR 82,000 crore in FDI under the existing regime. Raising the investment cap to 100 per cent is expected to attract a fresh wave of overseas capital and expertise, potentially making the sector more competitive and innovative, according to government officials.

The proposed amendments will not be limited to the FDI cap alone. The Finance Ministry has also recommended comprehensive changes to key legislations that govern the sector, including the Insurance Act, 1938, the Life Insurance Corporation (LIC) Act, 1956, and the Insurance Regulatory and Development Authority of India (IRDAI) Act, 1999. Revisions include lowering paid-up capital requirements and introducing a composite licence framework to simplify regulatory processes.

Supporters of the move argue that increased foreign participation will enhance product variety, strengthen customer protections and support the government’s broader goal of achieving “Insurance for All by 2047” by increasing outreach and affordability.

Source: The Tribune