Centre lines up Bill to allow 100% foreign investment in insurance sector

The government will table a Bill to raise foreign direct investment in the insurance sector to 100 per cent during the upcoming Winter session of Parliament, scheduled from December 1 to December 19. The Winter session will have 15 working days.

According to a Lok Sabha bulletin, the Insurance Laws (Amendment) Bill 2025 is among the 10 legislations listed for consideration. The Bill seeks to deepen insurance penetration, accelerate sectoral growth and improve ease of doing business.

Finance Minister Nirmala Sitharaman had announced the proposal to increase the foreign investment cap from 74 per cent to 100 per cent in this year’s Budget speech as part of the government’s financial sector reforms. The insurance sector has so far attracted ₹82,000 crore in foreign direct investment.

The finance ministry has proposed amendments to various provisions of the Insurance Act, 1938, including the FDI increase, reduction in paid-up capital requirements, and the introduction of a composite licence framework.

As part of a broader legislative overhaul, amendments will also be made to the Life Insurance Corporation Act 1956 and the Insurance Regulatory and Development Authority Act 1999. The proposed amendments to the LIC Act seek to empower the corporation’s board to make operational decisions such as branch expansion and recruitment.

The government aims to strengthen policyholder interests, enhance financial security, and facilitate the entry of new players into the insurance market, thereby supporting economic growth and employment generation. The changes are expected to boost operational efficiency, ease of doing business and support the goal of achieving “Insurance for All by 2047”.

The Insurance Act, 1938 remains the primary legislation governing India’s insurance sector, defining the regulatory framework for insurers, policyholders, shareholders and the Insurance Regulatory and Development Authority of India (Irdai).

The finance ministry will also introduce the Securities Markets Code Bill (SMC) 2025, which proposes merging the provisions of the Securities and Exchange Board of India Act 1992, the Depositories Act 1996, and the Securities Contracts (Regulation) Act 1956 into a single consolidated Code.

In addition, the first batch of Supplementary Demands for Grants for 2025-26 will be presented during the session. The government seeks Parliamentary approval for additional expenditure not accounted for in the Union Budget. The second and final batch of Supplementary Demands will be taken up during the Budget session, which is expected to begin at the end of January.